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C S^./'^-.StA -/^P-5 



GOVERNMENT 
TRANSACTIONS 




e, Gross National Product in Current and Constant Dollars 



(iross national product.. 



I,^ Personal consumption expenditures. 



Durable goods 

< Nondurable goods.. 
V Services 



Gross private domestic investment. 



1983 



3.304.8 

2.155.9 

279.8 
801.' 



3.66 
2 t-. 









Fixed investment ,, .^ ,^ t, .(, ., 

Nonresidential ^ 'V , %5!''' '% *'a/ ' . ' ■ 

<f Structures '*/•„ '«x ^a., «/>* **'• ' ' 



Producers' durable equipment- 
Residential 



.!^e<v^.-- ^.-- Residential :...:. :::::::::::::::;i::::' ^ ;%. 'v 

'*^.<^< ■■■<5*^#'' Nonfarm structures 'K> ^''r. 'a ^< 

JVVVS\.<1 F'a™ structures ^^ %^ .. ^<^U^o^ 

<}'^\^V]s> e Producers' durable equipment ^Mf ^ ■';■.■*' ^ H 



W< X O^ ft r® . iv.wui.iria uuiauic c^uipiiiciii, H'/^*/ 

"9 eP<y^ \o .^ , Change in business inventories y^ 'J/^'i 

^-.s^-^' Nonfarm Pa_ Q^ 






Farnr:;:;:::::;::::::::;::;;::;;::;::::::;:::;;::;::;:::: /J. x ^"^ ■•■ " 

^. Net exports of goods and services '>■» ^«/ . 'oi.. ^, 



o<r*< 



V, 



^<^ V Exports %*V 

^ Imports ^ /O; -«? % 



'"r 



Government purcha.ses of goods ar t, 'j}.^y>'<s ''«. '^o 
Federal ,%>^;V «,. '^...^ 



Natiormi defense:::::::;::- i^^^^^XS!^./ '^^ 

Nondeiense.. 
State and local 



Nondefen^".!'.'";:.:::::;::" <V>>7''^?f^^>oj, ■""''''''^y %„ '/ '^ 



^^ l^^^. ■ : • •.:^' 







c^ '*$$*S?' '^ , 



METHODOLOGY PAPERS: 

US. National Income and 
Product Accounts 






2!^. 



•^i^res 0» •• 



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U.S. DEPARTMENT OF COMMERCE 
Bureau of Economic Analysis 



November 1988 
BEA-MP-5 



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Cis^.r^ ;B6A-rrjp-i: 



GOVERNMENT 
TRANSACTIONS 



METHODOLOGY PAPERS: 

US. National Income and 
Product Accounts 



November 1988 



U.S. DEPARTMENT OF COMMERCE 
C. William Verity, Secretary 
§ Robert Ortner 

% Under Secretary for Economic Affairs 



BUREAU OF ECONOMIC ANALYSIS 

Allan H. Young, Director 

Carol S. Carson, Deputy Director 



For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 



Acknowledgments 



This paper was prepared by Helen Stone Tice and the staff of the Government Division, 
Joseph C. Wakefield, Chief David T. Dobbs, Karl D. Galbraith, Robert T. Mangan, and 
Richard C. Ziemer contributed to the Federal Government section; David J. Levin contributed 
to the State and local government section. Tracy R. Tapscott provided editorial assistance, 
and Katherine Dent and Teresa A. Williams provided secretarial assistance. 

The papers in this series on the methodology of the national income and product accounts 
are planned and coordinated by Helen Stone Tice. Allan H. Young, Robert P. Parker, and 
Carol S. Carson provide direction and guidance. 

Comments about the paper are invited. Comments, as well as questions about the material 
in the paper, should be directed to: Government Division, (BE-57), Bureau of Economic 
Analysis, U.S. Department of Commerce, Washington, DC 20230. 



Suggested Citation 

U.S. Department of Commerce. Bureau of Economic Analysis. Govern- 
ment Transactions. Methodology Paper Series MP-5. Washington, DC: 
U.S. Government Printing Office, November 1988. 



u 



CONTENTS 



Page 
PART I. INTRODUCTION 

Conceptual basis and framework 1 

Recording of government transactions in the NIPA's: Overview 1 

The NIP account 1 

Personal income and outlay account 4 

Government receipts and expenditures account 4 

Foreign transactions account 4 

Gross saving and investment account 4 

Recording of government transactions: Special features 4 

Social insurance funds 5 

Receipts other than taxes and social insurance contributions 5 

Purchases of structures and durable goods by government 5 

Subsidies 6 

Government enterprises 6 

Government enterprises: An illustration 6 

Relation of NIPA government receipts and expenditures to financial statements 8 

Coverage 8 

Netting and grossing 8 

Fiscal year 8 

Timing 8 

Definitions 9 

Presentation of the estimates 10 

NIPA tables 10 

Schedule 10 

Appendix I-A. Articles Related to Govemmient Transactions 13 



Tables 



I-l. Summary National Income and Product Accounts, 1982 2 

1-2. Economic Accounts for Three Entities 7 

1-3. Location of Government Transactions in the NIPA Tables 11 



111 



Page 
PART II. FEDERAL GOVERNMENT TRANSACTIONS 

Overview of estimating procedures 15 

Differences between receipts 15 

Coverage of transactors 15 

Coverage of transactions 18 

Netting and grossing 18 

Timing 18 

Differences between outlays and expenditures 18 

Coverage of transactors 18 

Coverage of transactions 18 

Netting and grossing 19 

Timing 19 

Intragovernmental transactions 19 

Derivation of receipts 19 

Derivation of expenditures 19 

Constant-dollar estimates of purchases 20 

Derivation of receipts 20 

Personal tax and nontax receipts 21 

Income taxes 21 

Withheld income taxes 21 

Declarations and final settlements less refunds 21 

Estate and gift taxes 24 

Personal nontaxes 24 

Corporate profits tax accruals 24 

Indirect business tax and nontax accruals 24 

Excise taxes 24 

Alcohol excise taxes 24 

Tobacco excise taxes 24 

Windfall profit tax 24 

Other excise taxes 25 

Customs duties 25 

Indirect business nontaxes 25 

Contributions for social insurance 25 

Old-age, survivors, and disability insurance 25 

Employer and employee contributions 25 

Self-employed contributions 26 

Hospital and supplementary medical insurance 26 

Unemployment insurance 27 

State unemployment tax 27 

Federal unemployment tax 27 

Railroad employees 28 

Federal employees 28 

Federal employee retirement 28 

Civilian retirement 28 

Military retirement 28 

Railroad retirement 28 

Veterans life insurance 29 

Workers' compensation 29 

Military medical insurance 29 



IV 



Page 

Derivation of expenditures 29 

Purchases of goods and services 29 

National defense purchases 34 

Aircraft 35 

Directly priced purchases 35 

Ratio purchases 35 

Missiles 35 

Ships 35 

Directly estimated purchases 35 

Vehicles 39 

Electronic equipment 39 

Other equipment 39 

Other durable goods 39 

Petroleum products 39 

Ammunition 39 

Other nondurable goods 39 

Military compensation 40 

Wages and salaries 40 

Supplements to wages and salaries 40 

Civilian compensation 40 

Wages and salaries 40 

Supplements to wages and salaries 40 

Contractual research and development 40 

Installation support 41 

Weapons support 41 

Personnel support 41 

Transportation of materiel 41 

Travel of persons 41 

Other services 41 

Military facilities 41 

Other structures 42 

Nondefense purchases 42 

Commodity Credit Corporation 42 

Transfer payments to persons 43 

Old-age, survivors, and disability insurance 43 

Hospital and supplemental medical insurance 43 

State unemployment insurance 44 

Railroad unemployment insurance 44 

Federal employees unemployment compensation 44 

Special unemployment benefits 44 

Federal civilian employee retirement 44 

Military retirement 45 

Railroad retirement 45 

Veterans life insurance 45 

Workers' compensation 45 

Military medical insurance 46 

Veterans pension and disability 46 

Veterans readjustment 46 

Food stamp benefits 46 

Black lung benefits 46 

Supplemental security income 47 

Earned income credit 47 

Other transfer payments to persons 47 

Transfer payments to foreigners 47 

Grants-in-aid to State and local governments 47 



Page 

Net interest paid 48 

Interest paid to persons and business 48 

Interest paid to foreigners 48 

Monetary interest received from persons and business 48 

Monetary interest received from foreigners 48 

Imputed interest received 48 

Subsidies less current surplus of government enterprises 49 

Subsidies 49 

Current surplus of government enterprises 49 

Wage accruals less disbursements 49 

Surplus or deficit (-), national income and product accounts 49 

Constant-dollar purchases of goods and services 50 

National defense purchases 50 

Durable goods 54 

Aircraft 54 

Missiles 54 

Ships 54 

Vehicles 57 

Electronic equipment 57 

Other equipment 57 

Other durable goods 57 

Nondurable goods 57 

Petroleum products 57 

Ammunition 57 

Other nondurable goods 57 

Compensation of employees 58 

Military compensation 58 

Civilian compensation 58 

Other services 58 

Contractual research and development 58 

Installation support 59 

Weapons support 59 

Personnel support 59 

Transportation of materiel 59 

Travel of persons 59 

Other services 59 

Structures 59 

Military facilities 59 

Other 60 

Nondefense purchases 60 

Durable goods 60 

Nondurable goods 60 

Compensation 64 

Other services 64 

Structiires 64 

Sources 65 

Appendix II-A. Definitions of the Major Types of National Defense Purchases of 

Goods and Services 73 

Appendix II-B. Federal Government Enterprises 75 



VI 



Page 
Tables 



II-l. Relation of Federal Government Receipts in the National Income and Product 

Accounts to the Budget, Fiscal Year 1982 16 

II-2. Relation of Federal Government Expenditures in the National Income and Product 

Accounts to the Budget, Fiscal Year 1982 17 

II-3. Special Supplemental Food Program: Fiscal Year Analysis 20 

II-4. Federal Government Receipts: Sources of Estimates 22 

II-5. Federal Government Expenditures: Sources of Estimates 30 

II-6. Relation of National Defense Purchases in the National Income and Product Accounts 
to National Defense Outlays in the Budget, Calendar Year 1982 34 

II— 7. National Defense Purchases: Sources of Estimates 36 

II— 8. Constant-Dollar Federal Government Purchases of Goods and Services: Sources of 

Estimates 51 

II-9. Methods Used in the Derivation of Constant-Dollar National Defense Purchases of 

Goods and Services 55 

11-10. Price Indexes Used in the Derivation of Constant-Dollar Federal Government 

Nondefense Purchases of Goods and Services 61 



PART III. STATE AND LOCAL GOVERNMENT TRANSACTIONS 

Overview of estimating procedures 77 

Annual estimates 77 

Derivation of receipts 80 

Replacement of COG data with alternative source data 80 

Adjustments 80 

Distribution of the adjusted data into NIPA receipts components 80 

Derivation of expenditures 81 

Replacement of COG data with alternative source data 81 

Adjustments 81 

Distribution of the adjusted data into NIPA expenditures components 82 

Quarterly estimates 82 

Constant-dollar estimates of purchases 82 

Derivation of receipts and expenditures 82 

Receipts 82 

Taxes and nontaxes 83 

Personal tax and nontax receipts 87 

Corporate profits tax accruals 87 

Indirect business tax and nontax accruals 87 

Contributions for social insurance 88 

Federal grants-in-aid 88 



Vll 



Page 

Expenditures 88 

Purchases of goods and services 92 

Compensation of employees 92 

Structures 92 

Financial services 93 

Durable goods, nondurable goods, and other services 93 

Transfer payments to persons 94 

Benefits from social insurance funds 94 

Public assistance 94 

Education 97 

Employment and training 97 

Other transfer payments 97 

Net interest paid 98 

Dividends received 98 

Subsidies 99 

Current surplus of government enterprises 99 

Wage accruals less disbursements 99 

Surplus or deficit (-), national income and product accounts 99 

Constant-dollar purchases of goods and services 100 

Compensation of employees 100 

Structures 103 

New construction 103 

Net purchases of existing structures 103 

New construction force-account compensation 103 

Financial services 103 

Durable goods, nondurable goods, and other services 103 

Sources 105 

Appendix III-A. Analysis of Charges and Miscellaneous General Revenue, COG, 

1982 109 

Appendix III-B. State and Local Government Functions Ill 



Tables 



III— 1. Derivation of State and Local Government Receipts in the National Income and 
Product Accounts (NIPA's) from Census of Governments and Other Sources, 
FY1982 78 

III-2. Derivation of State and Local Government Expenditures in the National Income and 
Product Accounts (NIPA's) from Census of Governments and Other Sources, 
FY1982 79 

III-3. State and Local Government Receipts: Sources of Estimates 84 

III-4. State and Local Government Expenditures: Sources of Estimates 89 

III-5. Derivation of State and Local Government Purchases of Goods and Other Services, 
FY 1982 95 

III-6. Price Indexes Used in the Deflation of State and Local Government Purchases of 

Goods and Services 101 

III-A-1. Distribution of Current Charges and Miscellaneous General Revenues Among 

Categories of Receipts and Expenditures, FY 1982 109 



VUl 



Part I. 
Introduction 



This paper presents the conceptual basis and frame- 
work of government transactions in the national in- 
come and product accounts (NIPA's), describes the pre- 
sentation of the estimates, and describes the sources 
and methods used to prepare annual, quarterly, and 
monthly estimates of government transactions. Part 
I, the introduction, discusses the recording of govern- 
ment transactions in the NIPA's and the relation of 
the NIPA measures of government receipts and ex- 
penditures to analogous measures from government 
financial statements. It also defines the measures of 
government transactions that appear in the NIPA ta- 
bles and indicates the tables in which they can be 
found. Parts II and III describe in detail the sources 
and methods used in the derivation of Federal Govern- 
ment transactions and of State and local government 
transactions, respectively. 



Conceptual Basis and 
Framework 

As described in "An Introduction to National Eco- 
nomic Accounting" in the March 1985 Survey of 
Current Business, the national economic accounts can 
be viewed as aggregations of accounts belonging to the 
individual transactors in the economy.^ The basic ap- 
proach used in national economic accounting is (1) to 
group into sectors economic transactors engaged in the 
same types of transactions and affected by, and re- 
sponding to, economic developments in a similar man- 
ner and (2) to set up uniform types of accounts that 
show the broad categories of economic transactions in 
which these sectors engage. Four sectors are com- 
monly distinguished: Business, household, govern- 
ment, and foreign. For each sector, a set of three ac- 
counts is created: A production account, which records 
the production attributable to that sector; an appro- 
priation account, which records the sources of the sec- 
tor's income, its current outlays, and its saving; and a 
saving-investment account, which records the sector's 
gross saving, net increase in assets, and net increase 
in liabilities. Taken together, these sector accounts 
constitute a double-entry system in which an outlay 



1. This article, by Allan H. Young and Helen Stone Tice, is reprinted as 
Methodology Paper Series MP-1 (Washington, DC: U.S. Government Printing 
Office, March 1985). 



recorded in one account for one sector is also recorded 
as a receipt in another account, either for the same 
sector or for another sector. 

The NIPA's, which are designed to display the value 
and composition of national output and the distri- 
bution of incomes generated in its production, are a 
combination of the sector accounts just described. In 
summary form, the U.S. NIPA's consist of five ac- 
counts: (1) The national income and product (NIP) 
account, which is a consolidation of the four sector 
production accounts and the business appropriation 
account; (2) the personal income and outlay account, 
which is the household appropriation account; (3) the 
government receipts and expenditures account, which 
is the government appropriation account; (4) the for- 
eign transactions account, which is a consolidation 
of the foreign appropriation account and the foreign 
saving-investment account; and (5) the gross saving 
and investment account, which is a consolidation of 
the saving-investment accounts of the business, house- 
hold, and government sectors. The five accounts, with 
entries for 1982, are shown in table I-l. 

Recording of government transactions 
in the NIPA's: Overview 

Government consists of those bodies and units, sup- 
ported mainly by taxes, that implement public pol- 
icy. The government receipts and expenditures ac- 
count, shown as account 3 in the five-account sum- 
mary, records transactions of government with other 
U.S. residents and with foreigners. On the left side, 
the transactions are the several categories of govern- 
ment expenditures and saving, where saving is the 
surplus or deficit. On the right side, the transactions 
are government receipts, including taxes and contribu- 
tions to social insurance funds, such as social security. 

Each entry in the government receipts and expendi- 
tures account has a counterentry in one of the other ac- 
counts. (In table I-l, the numbers in parentheses fol- 
lowing the entries identify the account and line num- 
ber of the counterentries.) The government receipts 
and expenditures entries in account 3 and their coun- 
terentries are shown in boldface in the discussion that 
follows. 

The NIP account. — Transactions between govern- 
ment and the other sectors enter the NIP account 
through the production accounts of the business and 
government sectors. The business production account 



Government Transactions. 



JSlovember 1988 



Table I-l.— Summary National Income and Product Accounts, 1982 

IBillionit oI'dollarHJ 
Account 1,— National Income and Product Account 



Line 



I-ine 



10 

11 
12 

i;) 

14 
15 
16 

17 

18 

19 

20 
21 
22 



23 

24 



25 

2R 



Compensation of employees 

Wanes and salaries 

Disbursements (2-7) 

Wage accruals less disbursements (l)-12) and (5-4) . 
Supplements to wages and salaries 

Employer contributions for social insurance (.'i-20) 

Other labor income (2-8) 



Proprietors' income with inventory valuation and capital 
consumption adjustments (2-9) 



Rental income of persons with capital consumption 

adjustment (2-10) 



Corporate profits with inventory valuation and capital 

consumption adjustments 

Profits before tax 

Profits tax liability (;M7) 

Profits after tax 

Dividends (2-12) 

Undistributed profits (5-6) 

Inventory valuation adjustment (5-7) 

Capital consumption adjustment (5-8) 



1.907.0 


27 


1.586.1 


28 


1.586.1 


29 





30 


320.9 




157.3 


31 


163.6 


32 




33 




34 


175.5 


35 




36 




37 


13.6 






38 




39 


150.0 


40 


169.6 




63.1 


41 


106,5 


42 


66.9 


43 


,39.6 


44 


-10.4 


45 


-9.2 





Personal consumption expenditures (2-3). 

Durable goods 

Nondurable goods 

Services 



Gross private domestic investment (5-1) 

Fixed investment 

Nonresidential 

Structures 

Producers' durable equipment 

Residential 

Change in business inventories 



Net exports of goods and services , 

Exports (4-1) 

Imports (4-3) 



Government purchases of goods and services (3-1) 
Federal 

National defense 

Nondefense 

State and local 



2.050.7 
252.7 
771.0 

1,027.0 

447.3 
471.8 
366.7 
143.3 
223.4 
105.1 
-24.5 

26.3 
361.9 
335.6 

641.7 
272.7 
193.8 
78.9 
369.0 



Net interest (2-15) 



272.3 



National income 2,518.4 



Business transfer payments (2-20) 

Indirect business tax and nontax liability (3-18) .... 
Less: Subsidies less current surplus of government 
enterprises (3-1 1) 



14.3 
258.8 



Charges against net national product 2,782.9 



Capital consumption allowances with capital 
consumption adjustment (5-9) 



383.2 



Charges against gross national product 3,166.1 

Statistical discrepancy (5-12) —.1 

GROSS NATIONAL PRODUCT 3,166.0 



GROSS NATIONAL PRODUCT 3,166.0 



Account 2. — Personal Income and Outlay Account 



Personal tax and nontax payments (3-16). 



409.3 



Personal outlays 2,107.5 

Personal consumption expenditures (1-27) 2,050.7 

Interest paid by consumers to business (2-18) 55.5 

Personal transfer payments to foreigners (net) (4-5) 1.3 



Personal saving (5-3) . 



153.9 



PERSONAL TAXES, OUTLAYS, AND SAVING 2.670.8 



7 
8 
9 

10 



II 
12 
13 

14 
15 
16 



IH 

19 
20 
21 

22 



Wage and salary disbursements (1-3) 
Other labor income (1-7) 



Proprietors' income with inventory valuation and capital 
consumption adjustments (1-8) 



Rental income of persons with capital consumption 
adjustment (1-9) 



Personal dividend income 

Dividends (1-14) 

Less: dividends received by government (3-10) 



Personal interest income 

Net interest (1-18) 

Interest paid by government to persons 

and business (3-7) 

Less: Interest received by government (3-9)... 
Interest paid by consumers to business (2-4) 

Transfer payments to persons 

From business (1-20) 

From government (3-3) 



Less; Personal contributions for social insurance (.3-21) 



PERSONAL INCOME. 



1,. 586.1 
163.6 

175.5 

13.6 

63.9 

66.9 

2.9 

369.7 
272.3 

110.0 
68.1 
55.5 

410.6 

14.3 

396.2 

112.3 
2,670.8 



Government Transactions. 



.November 1988 



Table I-l. — Summary National Income and Product Accounts, 1982 — Con. 

[Billions of dollars] 
Account 3.— Government Receipts and Expenditures Account 



Line 



Line 



Purchases of goods and services (1-41). 



9 
10 
11 

12 

13 

14 
15 



Transfer payments 

To persons (2-21) 

To foreigners (net) (4-6). 



Net interest paid 

Interest paid 

To persons and business (2-16) 

To foreigners (4-7) 

Less: Interest received by government (2-17) 

Less: Dividends received by government (2-13) 

Subsidies less current surplus of government 
enterprises (1-22) 



641.7 

404.0 
396.2 



60.1 

128.3 

110.0 

18.3 

68.1 

2.9 



16 

17 

18 

19 
20 
21 



Personal tax and nontax payments (2-1) 

Corporate profits tax liability (1-12) 

Indirect business tax and nontax liability (1-21) 



Contributions for social insurance . 

Employer (1-6) 

Personal (2-22) 



409.3 
63.1 

258.8 

269.6 
157.3 
112.3 



Less: Wage accruals less disbursements (1-4) 







Surplus or deficit ( — ). national income and 

product accounts (5-10) — 110.8 

Federal -145.9 

State and local 35.1 

GOVERNMENT EXPENDITURES AND SURPLUS 1,000.8 



GOVERNMENT RECEIPTS 1,000.8 



Account 4. — Foreign Transactions Account 



Exports of goods and services (1-39) 

Capital grants received by the United States (net) (5-11) 



361.9 




RECEIPTS FROM FOREIGNERS 



361.9 



Imports of goods and services (1-40). 



Transfer payments to foreigners (net) . 

From persons (net) (2-5) 

From government (net) (3-4) 



Interest paid by government to foreigners (3-8) 
Net foreign investment (5-2) 

PAYMENTS TO FOREIGNERS 



335.6 

9.0 
1.3 

7.8 

18.3 
-1.0 

361.9 



Account 5. — Gross Saving and Investment Account 



Gross private domestic investment (1-31). 
Net foreign investment (4-8) 



447.3 
-1.0 



GROSS INVESTMENT 



446.3 



10 

11 
12 



Personal saving (2-6) 

Wage accruals less disbursements (1-4) . 



Undistributed corporate profits with inventory valuation 

and capital consumption adjustments 

Undistributed corporate profits (1-15) 

Inventory valuation adjustment (1-16) 

Capital consumption adjustment (1-17) 



Capital consumption allowances with capital 
consumption adjustment (1-24) 



Government surplus or deficit ( — ), national income 
and product accounts (3-13) 



Capital grants received by the United States (net) (4-2) 
Statistical discrepancy (1-26) 



GROSS SAVING AND STATISTICAL 
DISCREPANCY 



153.9 



20.0 

39.6 

-10.4 

-9.2 



383.2 

-110.8 

-.1 

446.3 



NOTE. — Numbers in parentheses indicate accounts and items of counterentry 
disbursements, (2-7) is in account 2, line 7. 



in the accounts. For example, the counterentry for wage and salary 



4 Government Transactions. 



Jslovember 1988 



covers government purchases of goods and nonfactor 
ser\-ices from business and the components of factor 
and nonfactor charges against business product that 
business pays to government. The government pro- 
duction account covers government purchases of fac- 
tor ser\aces, specifically, the services of government 
employees. 

In the business production account, business output 
is recorded both in terms of goods and services (on the 
right side) and in terms of income payments and other 
costs arising from production (on the left side). Out- 
put in terms of goods and services produced is recorded 
as the sum of purchases by final users — business (on 
capital account), households (persons), foreigners, and 
government — plus the change in business inventories. 
Government purchases of business output is the only 
one of these entries that is a government transaction. 
Output in terms of income payments and other costs 
is recorded as the sum of factor charges — labor and 
property income — and nonfactor charges. The factor 
charges that are paid by business to government are 
employer contributions for social insurance, which 
is a component of business labor cost, and corporate 
profits tax liability, which is shown under corporate 
profits. The nonfactor charges in which the govern- 
ment is a party to the transaction are indirect busi- 
ness tax and nontax liability, subsidies, and cur- 
rent surplus of government enterprises. 

In the government production account, government 
output also is recorded both in terms of goods and 
services produced (on the right side) and in terms of 
income payments and other costs arising from pro- 
duction (on the left side). In both cases, government 
output is measured by the value of the inputs, ex- 
clusively the services of government employees. On 
the right side of the account, the sale of the ser- 
vices of government employees is entered as a gov- 
ernment purchase of a factor service; on the left 
side of the account, the compensation paid to govern- 
ment employees — including wage accruals less dis- 
bursements and employer contributions for social 
insurance — is entered as a factor cost. Government 
interest payments, although included elsewhere in the 
NIPA's, are not considered to be a payment for factor 
services; they, therefore, are not recorded in the gov- 
ernment production account. 

The consolidation of the business and government 
sector production accounts with those for the house- 
hold and foreign sectors yields a measure of total out- 
put, gross national product (GNP) and of the factor 
and nonfactor charges against GNP. On the right side 
of the NIP account, government purchases of goods 
and services includes the services of government em- 
ployees as well as goods and services purchased from 
business. On the left side, the components of factor 
and nonfactor charges against GNP include the por- 
tions that accrue to government. In addition, compen- 
sation of employees includes that paid to government 
employees. 



Personal income and outlay account. — ^This ac- 
count records the income, outlays, and saving of in- 
dividuals and the nonprofit institutions serving them. 
The income that persons receive from government con- 
sists of wages and salaries and other labor income paid 
to government employees, transfer payments, and in- 
terest. The outlays that persons make to government 
are taxes and social insurance contributions. On the 
left side, the only entry recorded for government trans- 
actions is personal tax and nontax payments. On the 
right side, transfer payments to persons from gov- 
ernment and interest paid by government to per- 
sons and business are recorded as components of per- 
sonal income. (Interest paid by government to busi- 
ness is included for computational reasons; it is offset 
by a negative entry for interest received by business 
from government in the entry "net interest.") In addi- 
tion, personal contributions for social insurance is 
deducted on the right side rather than being an entry 
on the left side. (Dividends and interest received by 
government are also shown in the personal income and 
outlay account, but only for the purpose of deriving the 
entries for personal dividend income and personal in- 
terest income.) 

Government receipts and expenditures ac- 
count. — ^This account records all transactions of gov- 
ernment with other U.S. residents and with foreign- 
ers. On the left side, these government transactions — 
purchases of goods and services, transfer payments 
to persons and to foreigners, net interest paid, 
subsidies less current surplus of government en- 
terprises, and surplus or deficit (— ), national in- 
come and product accounts less dividends received 
by government and wage accruals less disburse- 
ments — sum to government expenditures and surplus. 
On the right side, personal tax and nontax pay- 
ments, corporate profits tax liability, indirect busi- 
ness tax and nontax liability, and employer and 
personal contributions for social insurance sum to 
government receipts. 

Foreign transactions account. — In this account, 
both transfer payments to foreigners from govern- 
ment and interest paid by government to foreigners 

are components of payments to foreigners, on the right 
side. 

Gross saving and investment account. — In this 
account, government surplus or deficit (— ), national 
income and product accounts is a component of gross 
saving, on the right side. 

Recording of government transactions: 
Special features 

This section provides a more complete description of 
the recording of several types of government trans- 
actions than that provided in the previous section. 
Specifically, it discusses social insurance funds, gov- 
ernment receipts other than taxes and social insurance 



Government Transactions. 



^November 1988 



contributions, purchases of structures and durable 
goods by government, and payments of subsidies to 
business by government. In addition, the treatment 
of government enterprises, which is not apparent from 
the entries in the NIPA's, is laid out in detail. 

In what follows, it is useful at times to distinguish 
between government agencies that are part of gen- 
eral government and those that are government en- 
terprises. General government consists of those gov- 
ernment agencies that provide goods and services fi- 
nanced largely by taxes and not through normal price 
transactions. Government enterprises, on the other 
hand, sell their goods and services directly to the pub- 
lic for a price and recover part or all of their operating 
costs. The term "government" refers to the sum of 
general government and government enterprises. 

Social insurance funds. — Social insurance funds, 
which are part of general government, are funds ad- 
ministered by Federal and by State and local gov- 
ernments to provide retirement, health, unemploy- 
ment, disability, and similar benefits to individu- 
als. The main resources of these funds are de- 
rived from compulsory payments — called contributions 
in the NIPA's — ^by other sectors and other govern- 
mental units. The benefits paid from these funds 
are generally related to the income of individuals 
from employment and/or to the contributions made on 
their account, whether made by themselves or their 
employers. 

Because most social insurance funds are trust funds 
with resources that cannot be used for pui"poses other 
than those specified by statute or trust agreement, 
contributions to these flinds are not classified as taxes 
in the NIPA's. Similarly, because individuals have no 
choice in the disposition of this part of their labor in- 
come, personal contributions are not included in per- 
sonal income. In addition, the excess of contributions 
to these funds and their investment earnings over the 
benefits paid by them is part of the saving of gen- 
eral government, although the saving of social insur- 
ance funds is distinguished and recorded separately. 
(This treatment contrasts with that of private retire- 
ment plans, where the saving of these plans is part of 
personal saving.) 

Receipts other than taxes and social insurance 
contributions. — Most government receipts are com- 
pulsory payments by other sectors — taxes and social 
insurance contributions — that are not directly related 
to a specific good or service. Government, however, 
does receive some revenues from the public that rep- 
resent payments for goods or services. In the NIPA's, 
some of these revenues are called "nontax payments" 
and treated as if they were taxes, others are called 
government sales and deducted from government pur- 
chases, and still others are called enterprise revenue 
and accounted for in the treatment of government en- 
terprises described below. 

A payment will be treated as a nontax and in- 
cluded in government receipts if it is for a good or 



service that is administrative or regulatory in nature 
or for a good or service (such as education or hospitals) 
that frequently is provided in the private sector by a 
nonprofit institution. Examples of nontaxes include 
fines, fees paid for U.S. Department of Agriculture 
meat and poultry inspection, and tuition paid to State 
universities. 

A payment will be treated as a sale by general gov- 
ernment and deducted from government purchases if 
it is for a good or service that is similar to those sold 
by private business, but the provision of the good or 
service is ancillary to the primary function of the gov- 
ernment unit. Examples of government sales include 
school lunch sales and charges for the services of U.S. 
Department of Agriculture meat graders and fees re- 
ceived by the National Aeronautics and Space Admin- 
istration for launching services. 

A payment will be treated as enterprise revenue if it 
is for a good or service that is similar to those sold by 
private business, the provision of the good or service 
is the primary function of the government unit, and 
such payments cover a substantial part of the operat- 
ing costs of the government unit providing the good 
or service. Examples of enterprise revenue include 
charges for electricity generated by municipally owned 
utilities and sales of stamps by the U.S. Postal Service. 

The treatment of nontaxes extends the definition of 
government receipts to include, in addition to compul- 
sory payments, payments by other sectors for goods 
and services unlike those sold by business. The treat- 
ment of government sales preserves this notion of 
government receipts; in addition, recording govern- 
ment sales as negative purchases allows the other ex- 
penditure components in the NIP account to include 
business-like goods and services sold by government 
as well as those produced by business. For example, 
school district purchases of food for student meals from 
business are recorded in government purchases; the 
subsequent sale of school lunches is recorded in per- 
sonal consumption expenditures, and a corresponding 
deduction is entered in government purchases. Sub- 
stantially the same result is obtained from the treat- 
ment of government enterprises described below. 

Purchases of structures and durable goods by 
government. — In the NIPA's, there is no capital ac- 
counting for government. All goods and services 
purchased by government are treated in the same 
way — that is, as if consumed in the period in which 
purchased. Government purchases, therefore, make 
no distinction between consumption and investment; 
structures and durable goods purchased by govern- 
ment, which would be classified as investment if pur- 
chased by business, are recorded on current account. 
No charges for the use of capital are recorded in the 
government production account; the entries for inter- 
est and for capital consumption allowances on the left 
side of the NIP account contain entries only for do- 
mestic business (and for the rest of the world, in the 
case of interest). Finally, gross investment in the gross 



Government Transactions. 



JSlovember 1988 



saN-ing and investment account includes only private 
domestic and net foreign investment, and government 
saNang — that is, the surplus or deficit — includes only 
sa\dng in financial form. 

Subsidies. — Subsidies are monetary payments by 
government to business that enable goods or services 
to be sold at prices below the factor cost of production, 
which is defined to include a normal return on capital 
employed. These payments are included in business 
income from current production. Subsidies have been 
used to keep down prices of particular goods and ser- 
vices to consumers, to assist producers to meet com- 
petition from imported goods, or to maintain the ex- 
istence of particular industries. In the NIP account, 
subsidies are deducted from the sum of factor costs 
so that output measured on the left side in terms of 
income payments and other costs arising from produc- 
tion is valued at market prices and, therefore, is equal 
to output measured on the right side in terms of goods 
and services, also valued at market prices. 

Government enterprises. — Government enter- 
prises are government agencies that cover a substan- 
tial proportion of their operating costs by selling goods 
and services to the public and that maintain their own 
separate accounts. A "mixed" treatment of govern- 
ment enterprises is used in the NIPA's, in which some 
types of transactions are recorded as if they were part 
of the general government sector and others as if they 
were part of the business sector. This treatment is de- 
signed to provide a consolidated surplus or deficit for 
the government sector — which includes the surplus or 
deficit of enterprises — that is useful for many types of 
economic analysis and to combine the output of gov- 
ernment enterprises with that of business firms in the 
business sector. 

Government enterprises are treated like other busi- 
nesses and included in the NIPA business sector in 
that (1) their sales to final users are recorded in the 
business production accoiuit; (2) their outlays for ma- 
terials and business services are considered intermedi- 
ate rather than final and, therefore, are eliminated in 
the consolidation of the business sector production ac- 
count; and (3) both their wage, salary, and other com- 
pensation payments and their income are considered 
charges against business product rather than charges 
against government product. Within the business sec- 
tor, government enterprises are classified as noncor- 
porate business. This classification determines how 
their income is recorded. Specifically, for noncorpo- 
rate business, none of the owner's net income is shown 
as saving in the business sector; all saving is consol- 
idated with that of the owning sector. For a govern- 
ment enterprise, this means that the saving is con- 
solidated with that of its owner, general government. 
(For other noncorporate business, such as sole propri- 
etorships and partnerships, the saving is consolidated 
with that of households.) 

Government enterprises are treated like other gov- 
ernment agencies and included in the NIPA govern- 



ment sector in that (1) their interest payments are 
combined with those of general government rather 
than those of business; (2) their purchases of equip- 
ment and structures and their inventory change are 
combined with general government purchases rather 
than with business purchases in gross private domes- 
tic investment; and (3) as a consequence of (2), no en- 
tries are recorded for depreciation charges and other 
charges for the use of capital. 

The current surplus of government enterprises is the 
profit-like income of these businesses that accrues to 
general government. The surplus, however, may not 
be an accurate measure of factor cost; an enterprise 
may follow a policy of setting prices at a level at which 
the proceeds will not cover the full cost of current pro- 
duction. Consequently, this income is considered to be 
a nonfactor charge against gross product rather than 
a factor charge. (It is included in charges against GNP 
but not in national income.) 

In recording the current surplus of government en- 
terprises and subsidy payments to business as nonfac- 
tor charges in the NIP account, the two entries are 
combined. The current surplus of government enter- 
prises is subtracted fi^-om subsidies, and the combined 
entry "subsidies less current surplus of government 
enterprises" is entered with a negative sign to remove 
subsidies fi-om charges against GNP and to add the 
current surplus of government enterprises to charges 
against GNP. In addition, since the same public pur- 
pose can be served either by a direct subsidy or by 
government enterprise sales at a below-market price, 
combining the two entries gives a measure that is the 
same, regardless of how policy is implemented. 

Government enterprises: An illustration. — 

Table 1-2 shows how the transactions of government 
enterprises are recorded in the NIPA's. This table 
shows the economic accovmts for a government enter- 
prise and, for comparison, shows the same accounts 
for a private corporation and for general government, 
which owns the government enterprise. 

For the private corporation, the economic accounts 
are the production, the appropriation, and the saving- 
investment accounts. For the government enterprise, 
the economic accounts are the production and the ap- 
propriation accounts. The production account of the 
government enterprise is similar to that of the pri- 
vate corporation except that (1) charges against out- 
put exclude capital consumption allowances and inter- 
est paid and received and (2) the item "profits" in the 
business production account is replaced by the entry 
"current surplus." The appropriation account of the 
government enterprise is very different fi-om that of 
the private corporation, however, because the current 
surplus is transferred to general government. The en- 
terprise does not have a separate saving-investment 
account. 

For general government, the existence of its enter- 
prise is not reflected in the production account; as in 
the government sector production account mentioned 



Government Transadions- 



.November 1988 



Table 1-2. — Economic Accounts for Three Entities 



Private Corporation 


Government Enterprise 


General Government 


Production Account 


Production Account 


Production Account 


Wages and salaries 
Contributions for social 

insurance 
Indirect taxes 
Capital consumption 

allowances 
Interest paid 
Less: Interest received 
Profits 
Less: Subsidies 


Change in inventories 
Sales 

Less: Purchased materials ano 
services 


Wages and salaries 
Contributions for social 

insurance 
Indirect taxes 
Current surplus 


Change in inventories 
Sales 

Less: Purchased materials and 
services 


Wages and salaries 
Contributions for social 
insurance 


Sales to government 


Charges against output 


Output 


Charges against output 


Output 


Charges against output 


Output 


Appropriation Account 


Appropriation Account 


Appropriation Account 


Profits taxes 
Dividends paid 
Less: Dividends received 
Undistributed profits 


Profits 


Transfer of surplus to 
government 


Surplus 


Purchases 
From business 
Enterprise 
Inventories 
Fixed investment 
Other 
From government 
Transfer payments 
Interest paid 
Subsidies 
Less: Surplus of government 

enterprises 
Surplus or deficit (-). NIPA's 


Indirect business taxes 
Profits taxes 
Personal taxes 
Interest received 
Contributions for social 
insurance 


Distribution of profits and 
saving 


Profits 


Distribution of current surplus 


Current surplus 


Government expenditures and 
surplus or deficit (-) 


Government receipts 


Saving-Investment Account 


Saving-Investment Account 


Saving-Investment Account 


Plant and equipment 

purchases 
Purchases of land 
Less: Sales of plant and 

equipment 
Less: Sales of land 
Change in business 

inventories 
Net acquisitions of financial 

assets 
Less: Net increase in liabilities 


Undistributed profits 
Capital consumption 
allowances 


n.a. 


n.a. 


Net acquisition of financial 

assets 
Less: Net increase in liabilities 


Surplus or deficit, NIPA's 


Gross investment 


Gross saving 






Gross investment 


Gross saving 



n.a. Not applicable. 

Note. — The illustration in table 1-2 is based on the economic accounting framework presented 
in An Inlroduction to National Economic Accounting, Methodology Paper Series lv1P-1. The 
saving-investment accounts, therefore, include entries for certain transactions that are not shown 
in the NIPA's because they cancel when the accounts of all domestic sectors are consolidated. 
These transactions are purchases and sales of land (which cancel when the business sector is 
consolidated), net acquisitions of financial assets, and net increase in liabilities. 



8 Government Transactions. 



.November 1988 



earlier, government output is measured by the com- 
pensation paid to general government — not govern- 
ment enterprise — employees. The appropriation ac- 
count reflects the fact that government purchases from 
business include the change in enterprise inventories 
and enterprise purchases of plant and equipment. The 
current surplus of government enterprises is recorded 
on the left side as a deduction from government ex- 
penditures rather than as an addition to receipts. The 
enterprise surplus is consolidated with the surplus of 
general government. 

Relation ofNIPA government receipts 
and expenditures to financial 
statements 

The government receipts and expenditures account 
is derived primarily from financial statements for the 
Federal and the State and local governments; these 
statements record payments to and from government 
in a given time period. The focus of these statements 
is the summarization of individual government finan- 
cial transactions — taxing, spending, borrowing, and 
lending — into statistics useful for the conduct of gov- 
ernment. These financial statements differ from those 
required for the NIPA's in several respects: The cover- 
age of both transactors and transactions, the extent to 
which transactions are shown net or gross, the fiscal 
years used, and the timing with which transactions 
are recorded. Consequently, several types of adjust- 
ment are necessary to conform these financial state- 
ments to the NIPA concepts. Also, for some State 
and local government transactions, data from other 
sources are substituted for that from the financial 
statements because they are consistent with estimates 
of similar transactions elsewhere in the NIPA's, they 
provide more detail on types of transactions, or they 
provide monthly or quarterly observations that permit 
a more precise assignment of transactions to a given 
time period. 

Coverage. — Coverage adjustments are required for 
two categories of transactors in the Federal Govern- 
ment accounts. (1) Federal financial statements in- 
clude transactions with residents of the U.S. territo- 
ries and Puerto Rico as U.S. residents; NIPA govern- 
ment transactions do not include them. (2) From time 
to time, generally under provisions of law. Federal fi- 
nancial statements exclude certain entities that per- 
form governmental functions; the NIPA's include the 
receipts and expenditures of these entities in order to 
provide a comprehensive and consistent measure of 
government activity. 

Coverage adjustments are required for three cate- 
gories of transactions. (1) Financial statements in- 
clude transactions in financial assets and transac- 
tions in land, including oil bonuses — that is, payments 
for drilling rights on public land that are capitalized 
by business; the NIPA's exclude these transactions. 



(2) State and local financial statements classify \m- 
employment insurance as a State program; in the 
NIPA's it is classified as a Federal program. (3) Fi- 
nancial statements include only actual transactions; 
the NIPA's also include certain imputed transactions. 

Netting and grossing. — Netting and grossing ad- 
justments are required because, in financial state- 
ments, certain transactions are either recorded in a 
way that is not consistent with the NIPA classifica- 
tions or not recorded at all. Because the same amount 
is added to or subtracted from both receipts and expen- 
ditures from financial statements, these adjustments 
have no effect on the surplus or deficit, but they make 
NIPA receipts and expenditures differ from their coim- 
terparts in financial statements. 

These adjustments are necessary for three rea- 
sons. (1) Financial statements net some revenue items 
against expenditures that the NIPA's classify as re- 
ceipts; an example of such grossing adjustments is 
medicare (supplementary medical insurance) premi- 
ums. (2) Financial statements classify some revenue 
items as receipts that the NIPA's net against expendi- 
tures; examples of netting adjustments are the wind- 
fall profit tax on Federal sales of crude petroleum 
from Federal land and local government school limch 
sales. (3) Financial statements reflect only transac- 
tions between government and other sectors, elimi- 
nating transactions between parts of the same level 
of government. The NIPA's show some of these trans- 
actions on a gross basis, however, by means of a gross- 
ing adjustment. For example, employer contributions 
made by government as employer to government em- 
ployee retirement systems at the same level of govern- 
ment are considered intragovernmental expenditures 
and excluded from both receipts and expenditures in 
financial statements; in the NIPA's, however, both a 
receipt and a payment are recorded — the payment as 
a component of compensation of employees in the gov- 
ernment production account and the receipt as part of 
the revenue of social insurance funds in the govern- 
ment income and outlay account. 

Fiscal year. — Financial statements for State and 
local governments report data on a fiscal year basis 
that is not uniform for all governments. In the NIPA's, 
these reported data are placed on a calendar year basis 
and on a common fiscal year basis. 

Timing. — Financial statements for government 
generally record receipts and expenditures on a cash 
basis: Receipts are recorded when payments are re- 
ceived by government, and expenditures are recorded 
when checks are issued by government. The only ex- 
ception is interest on the public debt, which is recorded 
on an accrual basis — that is, when the liability is in- 
curred. In the NIPA's, the timing basis for government 
transactions with other sectors maintains consistency 
with the timing basis used for the other transactions of 
these sectors. Thus, receipts from business generally 



Government Transactions. 



J^ovember 1988 



are recorded on a liability, or accrual, basis; purchases 
of goods and services from business are recorded on a 
delivery basis, that is, when the goods or services are 
delivered to government. Net interest paid, nonfarm 
subsidies, and current surplus of government enter- 
prises are recorded on an accrual basis. Receipts from 
persons £md transfer payments to persons are recorded 
on a cash basis. Farm subsidies are also on a cash 
basis. 

Definitions 

Government consists of those bodies and units, sup- 
ported mainly by taxes, that implement public policy 
through the provision of services and the redistribu- 
tion of resources. The governmental structure of the 
United States includes the Federal Government, the 
governments of the fifty States, and local governments. 

The Federal Government consists of the executive 
and legislative branches, and the Judiciary. The ex- 
ecutive branch comprises the Office of the President, 
the executive departments, and a number of indepen- 
dent agencies, smaller offices, and the trust funds that 
some of them administer. Federally sponsored credit 
agencies are not included. These specialized lending 
institutions, such as the Federal National Mortgage 
Association and the Federal home loan banks, were 
originally created and owned by the Government but 
are now privately owned. 

State and local governments comprise all political 
subdivisions of the United States, including the trust 
funds and enterprises that some of them administer. 
Local governments consist of counties, municipalities, 
townships, school districts, numerous kinds of "special 
districts," and the District of Columbia. 

Until now, this paper has referred to personal tax 
and nontax payments, corporate profits tax liability, 
and indirect business tax and nontax liability because 
the perspective used in the five-account summary pre- 
sentation is that of the taxpayer. In the definitions 
that follow and in the remainder of this paper, the 
names of these three categories of taxes are replaced 
by terms that reflect the perspective of the government 
accounts — that is, personal tax and nontax receipts, 
corporate profits tax accruals, and indirect business 
tax and nontax accruals, respectively. 

The definitions are in the order shown in the sum- 
mary government receipts and expenditures table 
(NIPA table 3.1). Because that table is a consolida- 
tion of the Federal Government and of the State and 
local governments, an entry for Federal grants-in-aid 
does not appear. These grants are defined last. 

Personal tax and nontax receipts: Tax payments 
by persons that are not chargeable to business ex- 
pense and certain other personal payments to gov- 
ernment agencies (except government enterprises) 
that are treated like taxes. Personal taxes in- 
clude taxes on income, including realized net cap- 
ital gains; on transfers of estates and gifts; and 



on personal property. Nontaxes include tuitions 
and fees paid to schools and hospitals operated by 
government; fees, fines, and forfeitures; and dona- 
tions. Personal contributions for social insurance 
are not included. 

Corporate profits tax accruals: The sum of Fed- 
eral, State, and local income taxes on all corpo- 
rate earnings, including realized net capital gains. 
These taxes are net of refunds and applicable tax 
credits. 

Indirect business tax and nontax accruals: Tax 

liabilities that are chargeable to business ex- 
pense in the calculation of profit-type incomes and 
certain other business liabilities to government 
agencies (except government enterprises) that are 
treated like taxes. Indirect business taxes include 
taxes on sales, property, and production. Em- 
ployer contributions for social insurance are not 
included. Taxes on corporate incomes are not in- 
cluded; these taxes cannot be calculated until prof- 
its are known, and in that sense they are not a 
business expense. Nontaxes include regulatory 
and inspection fees, special assessments, fines and 
forfeitures, rents and royalties, and donations. 

Contributions for social insurance: Employer and 
personal contributions for social insurance. Em- 
ployer contributions include employer payments 
under the following programs: Old-age, survivors, 
and disability insurance (social security); hospital 
insurance; unemployment insurance; government 
employee retirement; railroad retirement; mili- 
tary medical insurance; and publicly administered 
workers' compensation. Personal contributions in- 
clude payments by employees, the self-employed, 
and other individuals who participate in the fol- 
lowing programs: Old-age, survivors, and disabil- 
ity insurance (social security); hospital insurance; 
supplementary medical insurance; unemployment 
insurance; government employee retirement; rail- 
road retirement insurance; veterans life insur- 
ance; and temporary disability insurance. 

Government purchases of goods and services: 

Purchases from business (including net purchases 
of used goods), compensation of government em- 
ployees, and purchases from foreigners. The 
change in inventories and purchases of plant 
and equipment by government enterprises are in- 
cluded, but their current-account purchases are 
not. Purchases, a category of expenditures, does 
not include transfer payments, interest paid by 
government, and subsidies. (These are separate 
categories of expenditures.) Transactions in finan- 
cial assets and land are not included in either pur- 
chases or expenditures. 

Transfer payments to persons: Income payments 
to persons for which they do not render current 
services. Transfer payments include benefits from 
the social insurance funds and payments under 



10 Giwemment Transactions. 



J^ovember 1988 



certain other programs. Included are old-age, sur- 
vivors, and disability insurance (social security); 
hospital insurance; supplementary medical insur- 
ance; medicaid; unemployment insurance; govern- 
ment employee retirement; workers' compensa- 
tion; veterans benefits; food stamps; black lung; 
supplemental security income; and public assis- 
tance. Government payments to nonprofit insti- 
tutions, other than for work under research and 
development contracts, are also included. 

Transfer payments to foreigners: U.S. Government 
nonmilitar^' grants to foreign governments in cash 
and in kind and U.S. Government transfer pay- 
ments, mainly retirement benefits, to former res- 
idents of the United States. 

Net interest paid: Interest paid to persons and busi- 
ness and to foreign businesses, governments, and 
persons, less interest received from business and 
from foreigners. Interest paid consists of mone- 
tary interest paid on public debt and other finan- 
cial obligations. Interest received consists of mon- 
etary and imputed interest received on loans and 
investments, including the balances of State and 
local social insurance funds. 

Dividends received: Dividends received by State 
and local general government, primarily by their 
social insurance funds. 

Subsidies less current surplus of government en- 
terprises: Subsidies are the monetary grants 
paid by government to business, including govern- 
ment enterprises at another level of government. 
The current surplus of government enterprises is 
their current operating revenue and subsidies re- 
ceived from other levels of government less their 
current expenses. In the calculation of their cur- 
rent surplus, no deduction is made for deprecia- 
tion charges and net interest paid. The current 
surplus of government enterprises is not counted 
as a profit-type income and, accordingly, not as 
a factor charge. Subsidies and current surplus 
are shown as a combined entry because deficits in- 
curred by government enterprises may result fi*om 
selling goods to business at below-market prices in 
lieu of giving them subsidies. 

Wage accruals less disbursements: Wages and 
salaries earned less wages and salaries paid. 
This difference occurs when there are retroactive 
changes in wages and salaries; it is subtracted in 
deriving total government expenditures, which re- 
flect wages and salaries on a cash basis. 

Surplus or deficit (-), national income and prod- 
uct accounts: The sum of government receipts 
less the sum of government expenditures. It may 
also be viewed as the sum of net acquisitions of 
financial assets by government and government 



enterprises and net government purchases of land 
and of rights to government-owned land includ- 
ing oil resources, less net borrowing. The sur- 
plus or deficit of social insurance funds is shown 
separately. 

Federal grants-in-aid: Net payments from the Fed- 
eral Government to State and local governments 
to help finance State and local government activ- 
ities in areas such as public assistance, highway 
construction, and education. 



Presentation 
of the Estimates 

NIPA tables 

The estimates of government transactions are pub- 
lished in the NIPA tables, which appear in the Survey 
(and reference volumes cited therein). Table 1-3 indi- 
cates the location, by NIPA table number, of the var- 
ious annual and quarterly estimates of government 
transactions and, where applicable, of estimates in 
constant dollars and the corresponding price indexes. 
Annual estimates generally cover 1929 to the present; 
quarterly estimates in current dollars generally cover 
the first quarter of 1946 to the present; and quarterly 
estimates in constant dollars generally cover the first 
quarter of 1947 to the present. 

In addition to the NIPA tables, additional detail on 
government transactions within the NIPA framework 
is presented in several special articles annually in the 
Survey. These include "Federal Fiscal Programs," gen- 
erally in the February Survey, and "Receipts and Ex- 
penditures of State Governments and of Local Govern- 
ments." Other Survey articles on government transac- 
tions are listed in appendix I-A. 

Schedule 

With two exceptions, the advance quarterly NIPA 
estimates of government transactions are prepared in 
the first month after the end of the quarter, revised 
a month later (the preliminary estimates), and re- 
vised again the following month (the final estimates). 
The exceptions are corporate profits tax liability, to- 
tal receipts, and the government surplus or deficit, 
for which no advance estimates are prepared because 
of lags in the availability of information on corporate 
profits. No further revisions are made in the quarterly 
estimates until the annual revisions, which usually oc- 
cur each July and cover the 3 most recent years. Fol- 
lowing the third annual revision, no further revisions 
are made in the estimates until the comprehensive re- 
visions, which usually occur every 5 years. 



Government Transactions. 



November 1988 



11 



Table 1-3. — Location of Government Transactions in the NIPA Tables 



Item 



Total 



Federal 



State and local 



Current-dollar estimates 



Receipts . 



Personal tax and nontax receipts ' . 
By category 



Corporate profits tax accruals ' 

Indirect business tax and nontax accruals ' 

By category 

Contributions for social insurance 

Employer contributions 

By category of social insurance fund .. 

Personal contributions 

By category of social insurance fund .. 

Federal grants-in-aid 



Expenditures 

By type and/or function 

Purchases of goods and services . 

Durable goods 

By category 

Nondurable goods 

By category 

Services 

Compensation of employees.. 
Wages and salaries 



Supplements to wages and salaries 

By type 

Employer contributions for social insurance . 

Other labor income 

Other services 

By category 

Structures 

By type 



Transfer payments. 

To persons 

By category 

To foreigners 



Grants-in-aid to State and local governments. 

Net interest paid 

Interest paid 

To persons and business 

To foreigners 

Less: Interest received by government 



Less: Dividends received by government 

Subsidies less current surplus of government enterprises . 
Subsidies 



By category 

Current surplus of government enterprises . 



By category 



Less: Wage accruals less disbursements . 



Surplus or deficit (-), national income and product 
accounts. 

Social insurance funds 

Other 



Social insurance funds receipts and expenditures , 

Relation of NIPA estimates to source data 

Employment: 

Number of employees 

Persons engaged in production 

Hours worked by employees 

Gross national product originating in government.. 

Net national product originating in government 

National income originating in government 



3.1* 

2.1.2.7, 3.1*, 3.4*. 8.9* 



1.14, 1.16, 3.r, 6.20B*, 8.13*, 9.6 

1.9, 1.21* (farm), 1.23* (housing), 
3.1*, 3.5\8.9* 



1.9, 3.1*, 3.6* 

1.14, 3.6*, 6.12*, 8.5*, 8.9* 

8.5* 

2.1, 2.6, 3.6*, 8.14* 



3.1* 
3.14* 

1.1, 1.17 (autos), 1.19 (trucks), 3.1' 
3.7B, 8.1, 8.9*, 9.1t 



1.15*, 3.1*, 6.4B* 

1.14, 1.15*, 2.1, 2.6, 6.5B*, 6.8B* 

(per empl.) 
1.15* 



(see receipts) 
6.13* 



5.4*2 
5.4*2 

3.1* 

1.9, 3.1*, 3.1*, 8.9* 

2.1 

3.1*, 4.1,9.5t 



3.1*, 3.14* 
3.1*, 8.8* 



3.1*, 
3.1*, 



8.8* 

4.1, 4.5*, 9.5t 



3.1*, 8.8*, 8.9* 

3.1*, 8.7* 

1.9, 1.23* (housing), 3.1*, 3.12*, 8.9* 
1.21* (farm), 3.1*, 8.9* (nonfarm 
housing) 



3.1* 



1.9,3.1* 
3.1*, 5.1 

3.1* 
3.1* 



6.6B*, 6.7B* 

6.10B* 

6.11* 

1.7,6.1* 

1.12* 

1.12*, 1.15*, 6.3B* 



3.2, 9.3t 

3.2, 3.4*, 9.3t 
3.2, 3.4* 

3.2, 9.3t 

3.2, 3.5*, 9.3t 

3.2, 3.5* 

3.2, 3.13*, 9.3t 
3.6*, 3.13* 
3.6*, 8.9* 
3.6*, 3.13* 
3.6* 



3.2, 9.3t 
3.15* 

1.1, 3.2, 3.7B, 3.9 (defense), 

8.1, 9.1t, 9.3t 
3.7B, 3.9 (defense) 
3.9 (defense) 
3.7B, 3.9 (defense) 
3.9 (defense) 
3.7B, 3.9 (defense) 
3.7B, 3.9 (defense), 6.4B* 
6.5B*, 6.8B* (per empl.) 



8.5* 

(see receipts) 

3.7B, 3.9 (defense) 
3.9 (defense) 
3.7B, 3.9 (defense) 

3.2, 9.3t 

3.2, 3.11*, 3.13*, 9.3t 

3.11* 

3.2, 9.3t 

3.2, 9.3t 

3.2, 9.3t 
3.2, 8.8*, 9.3t 
3.2, 9.3t 
3.2. 8.8*, 9.3t 
3.2. 8.8*. 9.3t 



3.2, 3.12*, 9.3t 
3.2, 3.12*, 9.3t 

3.12* 

3.2, 3.12*, 9.3t 

3.12* 

3.2, 9.3t 

3.2, 5.1,9.3t 

3.2 
3.2 

313* 

3J 78,3.19* 

6.6B*, 6.7B* 
6.10B* 

1.7, 6.1* 



3.3, 9.4t 

3.3, 3.4*, 9.4t 
3.3, 3.4* 

3.3. 9.4t 

3.3, 3.5*, 9.4t 

3.3, 3.5* 

3,3, 3.13*, 9.4t 

3.6*, 3.13* 

3.6* 

3.6*, 3.13* 

3.6* 

3.3, 9.4t 

3.3, 9.4t 

3.16* 

1.1, 3.3, 3.7B, 8.1, 9. It, 9.4t 

3.7B 

3.7B 

3.7B 

3.3, 3.7B, 6.4B* 

6.5B*, 6.8B* (per empl.) 

8.5* 

(see receipts) 

3.7B 
3.7B 



3.3, 3.11*, 3.13*, 9.4t 
3.11* 



3.3, 9.4t 
3.3, 8.8*, 9.4t 



3.3, 8.8*, 9.4t 

3.3, 8.7*. 9.4t 

3.3, 3.12*, 9.4t 
3.3, 3.12*, 9.4t 



3.3, 3.12*. 9. 4t 

3.12* 

3.3, 9.4t 

3.3, 5.1, 9.4t 

3.3 
3.3 

3.13* 
3.18* 

6.6B*, 6.7B* 
6.10B* 

1.7, 6.1* 



See footnotes at end of table. 



12 Government Transactions. 



J^ovemher 1988 



Table 1-3. — Location of Government Transactions in the NIPA Tables — Continued 



Item 



Total 



Federal 



State and local 



Constant-dollar estimates 



Purchases of goods and services. 



Durable goods 

By category 

Nondurable goods . 
By category 



Services 

Compensation of employees . 
Other services 

Structures 

By type 



Gross national product originating in government. 

Net national product originating in government 

National income originating in government 



1.2, 1.18 (autos), 1.20 (trucks), 3.8B, 
8.1 (defense), 8.1 



5.5* i 
5.5* » 

1.8,6.2* 

1.13* 

1.13* 



1.2,3.88,3.10 



3.8B, 3.10 (defense) 
3.10 

3.8B, 3.10 (defense) 
3.10 

3.8B, 3.10 (defense) 
3.8B, 3.10 (defense) 
3.8B, 3.10 (defense) 

3.8B, 3.10 (defense) 



1.8,6.2* 



1.2, 3.8B, 8.1 

3.8B 

3.8B 

3.8B 
3.8B 
3.8B 

3. SB 
1.8,6.2* ■" 



Price indexes 



Purchases of goods and services. 



Durable goods . 
By category .. 



Nondurable goods , 
By category 



Services 

Compensation of employees . 

Other services 

By category 

Structures 

By type 



Gross national product originating in government. 



7.1, 7.4t, 7.16, 8.1 



7.12*^ 
7.12* i 

7.6* 



7.1, 7At, 7.16, 8.1 

7.16,7.17 (defense) 
7.17 

7.16,7.17 (defense) 
7.17 

7.16, 7.17 (defense) 
7.16, 7.17 (defense) 
7.16, 7.17 (defense) 
7.17 

7.16,7.17 (defense) 



7.6t 



7.1, 7.4t, 7.16, 8.1 
7.16 

7.16 

7.16 
7.16 
7.16 

7.16 
7.6* 



* Annual estimates only. 

t Quarterly, not seasonally adjusted estimates only. 

? Implicit price deflator. 

1. In tables where perspective is that of the taxpayer rather than government, receipts are 
shown as payments and accruals are shown as liabilities. 

2. In these tables, purchases of structures include compensation ol government employees en- 
gaged in new force-account construction. In other tables showing government purchases, this 
compensation is classified as a sen/ice and is included as part of government compensation ot 
employees. 



Notes. — (1) Except as noted, these tables contain both annual estimates and quarterly esti- 
mates seasonally adjusted at annual rates. (2) Except as noted, price indexes are fixed-weighted 
price indexes with 1982 weights. (3) Tables 3.7, 3.8. 3.17, 6.4-6.10, and 6.14-6.24 are published 
in two parts: 3.7A and 3.8A (for 1929-71). 3.17A (for 1952-67). 6.4A-6.10A, 6.14A, and 6.19A 
(for 1929-48). and 6.15A-6.18A and 6.20A-6.24A (for 1929-47); and 3.78 and 3.8B (for 1972 
and later years). 3.17B (for 1968 and later years). 6.4B-6.10B. 6.14B, and 6.19B (for 1949 and 
later years), and 6.15B-6.18B and 6.20B-6.24B (for 1948 and later years). 



Appendix I- A 

Articles Related to Government Transactions 



The following is a list of selected articles related to government transactions that have 
appeared in the Survey of Current Business in the last decade. 



"Federal Farm Programs for 
IGSfr-GO." April 1986 (pages 
31-35). 



Includes a discussion of the national income and 
product account treatment of the Commodity Credit 
Corporation. 



"Federal Fiscal Programs." 

February 1988 (pages 19-24). 



Presents the annual "translation" of the Federal bud- 
get receipts and expenditures into the national income 
and product account estimates. 



"Federal Personal Income Taxes: 
Liabilities and Payments, 
1977-81." January 1983 (pages 
27-30). 



Presents Federal personal income taxes on a liabil- 
ity basis and compares them with the payments ba- 
sis used in the accounts; includes a brief methodology. 
Subsequently updated. 



"Implicit Price Deflators for 
Military Construction." 
November 1983 
(pages 14-18). 



Discusses construction prices in general and the devel- 
opment of price indexes for military construction. 



"Special Note. — National Defense 
Purchases." November 1982 
(pages 4-6). 



Discusses the various measures of spending — expend- 
itures, purchases, and outlays — for national defense, 
focusing on the defense buildup in the early 1980's; 
includes some methodology. 



"National Defense Purchases: A 
Review of Appropriations 
and Real Purchases." 
November 1984 
(pages 11-16). 



Reviews the national defense appropriations and 
constant-dollar buildup in terms of both budget na- 
tional defense purchases of goods and services. 



"Receipts and Expenditures of 
State Governments and of 
Local Governments: Revised 
and Updated Estimates, 
1984-87." September 1988 
(pages 23-25). 



Presents a deconsolidation of the receipts and expen- 
ditures account for State and local governments into 
separate accounts for the two levels of government. 



"Sources of Change in Federal 
Government Transfer 
Payments to Persons, 
1970-81." October 1982 (pages 
25-32). 



Discusses the growth in the level and relative size of 
transfer payments to persons in terms of three major 
sources: (1) automatic cyclical effects, (2) automatic 
inflation effects, and (3) legislation and other sources. 



13 



14 Government Transactions. 



J^ovember 1988 



^Sources of Change in the 

Federal Government Deficit, 
1970-86." May 1985 (pages 
25-32). 



Discusses the change in the Federal deficit (on the na- 
tional income and product accounting basis) by exam- 
ining trends in receipts and expenditures, their compo- 
sition, and their automatic responsiveness to the busi- 
ness cycle and inflation. 



"Sources of Growth in Selected 
State Local Go vemment Tax 
Receipts." February 1982 
(pages 15-18). 



Discusses the growth of selected tax receipts in terms 
of legislative actions, on the one hand, and events out- 
side the reach of legislative actions (mainly economic 
activity and inflation), on the other. 



"Tax Reform Act of 1986." March 
1987 (pages 18-25). 



Presents a brief history of Federal tax legislation in 
the 1980's and discusses in detail the provisions of the 
Tax Reform Act of 1986. Presents the impact of those 
provision on a national income and product accounting 
basis. 



"The State and Local 

Government Fiscal Position: 
An Alternative Measure." 
March 1984 (pages 23-25). 



Discusses the characteristics of the State and local gov- 
ernment surplus or deficit on the national income and 
product account basis that must be considered when 
using it to analyze the fiscal position of these govern- 
ments and presents an alternative measure of the fis- 
cal position. Subsequently updated. 



Part II. 
Federal Government Transactions 



Overview of Estimating 
Procedures 

The NIPA estimates of Federal Government receipts 
and expenditures are based on the Federal budget, 
published by the Office of Management and Budget 
(0MB), on financial reports published by the Depart- 
ment of the Treasury, and on reports of other Federal 
Government agencies. 

The budget is published as a set of documents, in- 
cluding the Budget of the United States Government 
(Budget) [4A-1], the Budget of the United States Gov- 
ernment: Appendix (Budget: Appendix) [4A-2], and the 
Budget of the United States Government: Special Anal- 
yses (Special Analyses) [4A-3]. The Treasury also pre- 
pares a set of documents, including the United States 
Government Annual Report: Appendix [80], Monthly 
Treasury Statement of Receipts and Outlays of the 
United States Government (MTS) [77], and the Trea- 
sury Bulletin [78]. The appendixes to the budget and 
to the Treasury's annual report provide the most de- 
tailed and complete fiscal year data on receipts, out- 
lays, balances, and other cash-basis information cov- 
ering all Federal Government entities. (The data fi-om 
the 0MB and Treasury documents will be referred to 
collectively as "budget data" when the context is a gen- 
eral description of methodology.) The documents are 
keyed to the fiscal year, which begins on October 1, 
ends the following September 30, and is designated by 
the calendar year in which it ends. 

Tables II- 1 and II-2 show the relation of receipts and 
outlays in the Federal budget to NIPA estimates of 
receipts and expenditures. The tables are regroup- 
ings, with detail by major receipt category or agency, 
of NIPA table 3.17B. The first column shows receipts 
by category or outlays by agency as shown in the bud- 
get. The next several columns show the differences 
between the budget data and NIPA estimates, and the 
remaining columns show the estimates of total NIPA 
receipts or expenditures and the distribution of the to- 
tals among NIPA categories. 

Tables II- 1 and II-2 have two major roles at differ- 
ent points in the cycle of estimating NIPA receipts and 
expenditures. In their first role, the tables provide 
a structured format for the "translation" of the Fed- 



eral budget into the NIPA receipts and expenditures. 
This translation — which is based largely on data from 
the Budget — provides a framework, or a benchmark, 
for the current quarterly estimates. For example, the 
translation of the fiscal year 1989 budget as it was 
transmitted to Congress in early 1988 provided var- 
ious expenditures relationships for fiscal years 1988 
and 1989 (discussed in detail later) needed to pre- 
pare the current quarterly estimates for calendar year 
1988. 

In their second role, the tables provide the same 
structured format for the fiscal year analysis carried 
out after the fiscal year is over. V.Tiile this role is sim- 
ilar to the first role, the analysis of receipts and ex- 
penditures is much more detailed, the data are actual 
rather than budget estimates, and the source data — 
especially for receipts — are different than those used 
in the budget translation. This fiscal year analysis 
provides the framework for the quarterly estimates 
prepared for annual revisions, which usually occur 
each July. For example, the 1987 fiscal year analy- 
sis provided the basis for the estimates prepared as 
part of the July 1988 revision. 

As used in both roles, the tables also provide a rec- 
onciliation between the NIPA estimates and the bud- 
get. The total receipts and expenditures of the Federal 
Government are known, and the NIPA estimates must 
reconcile to the budget totals. 

Differences between receipts 

Columns 2-6 in table II-l show the differences in 
coverage, netting and grossing, and timing between 
receipts in the budget and NIPA receipts. 

Coverage of transactors. — The budget includes re- 
ceipts from persons in the U.S. territories (including 
American Samoa, Guam, and the Virgin Islands of 
the United States) and the Commonwealth of Puerto 
Rico. In the NIPA's, residents of the U.S. territo- 
ries and Puerto Rico are considered residents of the 
rest of the world, rather than U.S. residents. The re- 
ceipts, largely contributions for social insurance, are 
not, however, treated as receipts from the rest-of- 
the-world sector; instead, they are excluded from the 
NIPA's. 

The budget does not include receipts of certain en- 
tities that are part of the NIPA government sector. 
These receipts include those of the Tennessee Valley 



15 



16 Government Transactions. 



Jslovemher 1988 



Table 11-1. — Relation of Federal Government Receipts in the National Income and Product Accounts to the Budget, Fiscal Year 1982 

[Billions of dollars] 



Line 



Budget category 



Budget 
receipts 



(1) 



Coverage diHerences 



Transactors 



Less; U.S. 
territories 

and 
Puerto 

Rico 

(2) 



Plus: 

Receipts 

of entities 

not in 

budget 

0) 



Transac- 
tions 



Plus: 
Imputa- 
tions 

(4) 



Plus: 
Netting 

and 
grossing 

differ- 



(5) 



Plus: 
Timing 
differ- 
ences 



(6) 



Equals: Federal Government receipts, national income and 
product accounts 



Total 



(7) 



Personal 
tax and 
nontax 
receipts 



(8) 



Corporate 
proms tax 
accruals 



(9) 



Indirect 
business 
tax and 

nontax 
accruals 

(10) 



Contribu- 
tions for 

social 
insurance 



(11) 



10 



13 



16 
17 
18 

19 



Individual income taxes 

Corporation income taxes 

Social insurance taxes and contributions: 

Social security trust funds 

Railroad retirement accounts 

Unemployment insurance 

Federal employees retirement contributions 

Other retirement contributions 

Excise taxes 

Estate and gift taxes 

Customs duties 

Miscellaneous receipts: 
Deposits of earnings by Federal Reserve banks 
All otfier 

Subtotal 

Not allocated to budget categories: 

Receipts of entities not in budget 

Inputalions 

Receipts from budget expenditures: 
Employer contributions for employee retirement . 

Meciicare insurance premiums 

Otfier 

Total 



298.1 
49.2 

177.5 

3.2 

16.2 

4.1 

.1 

36.3 

8.0 

8.9 



15.2 
1.0 



617.8 







617.8 






1.0 


.2 











.1 
1.2 







1.2 



-.2 




16.9 







16.9 



-0.6 
-1.2 



2.0 








8.7 
3.9 
5.9 

18.7 



4.5 
-11.2 



-1.8 

-.1 

.4 










.1 


-8.8 






.2 

-8.6 



30Z0 
36.8 

176.7 

3.2 

16.5 

4.1 

.1 

35.6 

8.0 

8.9 



15.3 
.9 



607.9 



-.2 
16.9 



8.7 
3.8 
6.1 

643.3 



302.0 


-.3 









.1 

8.0 




.2 

310.0 






310.0 




36.8 



15.3 




52.1 







52.1 











35.5 

8.9 


.7 

45.0 





5.3 

50.0 



177.0 

3.2 

16.5 

4.1 

.1 



200.8 



.1 
16.9 



8.7 

3.8 

.8 

231.1 



Government Transactions. 



J^ovemher 1988 



17 



Table 11-2.— Relation of Federal Government Expenditures in the National Income and Product Accounts to tine Budget, Fiscal Year 1982 

[Billions of dollars] 



Line 



Agency 



Budg- 
et 

out- 
lays 



(1) 



Coveraee differences 



Transactors 



Less: 
U.S. 

territo- 
ries 
and 

Puerto 
Rico 



(2) 



Plus: 
Expen- 
ditures 

of 
entities 

not in 
budget 



(3) 



Transcations 



Less: 



Net 
lend- 
ing 



(4) 



Net 
pur- 
chases 
of land 



(5) 



Otfier 
financial 
transac- 
tions ' 



(6) 



Pius: 



Impu- 
tations 



(7) 



Plus: 
Netting 

and 
gross- 
ing 
differ- 



(8) 



Plus: 
Timing 
diHer- 
ences 



(9) 



Less: 
Intra- 
gov- 
ern- 
mental 
trans- 
actions 



(10) 



Equals: Federal government expenditures, national income and 
product accounts ' 



Total 



(11) 



Purchases of 

goods and 

services 



De- 
fense 



(12) 



Nonde- 
fense 



(13) 



Transfer 
payments 



To 
per- 



(14) 



To 
for- 
eigners 



(15) 



Grants- 
in-aid to 

Stale 
and local 
govern- 
ments 



(16) 



Net 
inter- 
est 
paid 



(17) 



Subsi- 
dies 
less 
current 
surplus 

of 
govern- 
ment 
enter- 
prises 

(18) 



I 

2 
3 

4 
5 
6 
7 
8 
9 
10 
11 

12 

13 
14 
15 
16 
17 
18 
19 
20 
21 

22 

23 
24 

25 

26 

27 

28 



Legislative Branch 

The Judiciary 

Executive Office of the President 

Funds Appropriated to the President 

Department of Agriculture 

Department of Commerce 

Department of Defense — Military 

Department of Defense— Cfvil 

Department of Education 

Department of Energy 

Department of Health and Hunnan 

Services. 
Department of Housing and Urban 

Development. 

Department of the Interior 

Department of Justice 

Department of Labor 

Department of State 

Department of Transportation 

Department of the Treasury 

Environmental Protection Agency 

General Services Administration 

National Aeronautics and Space 

Administration. 

Office of Personnel Management 

Veterans' Administration 

Other independent agencies 

Undistributed offsetting receipts: 

Errployer share, enployee 
retirement. 

Interest received by trust funds 

Other 

Subtotal 

Not allocated to agencies: 

Expenditures of entities not in 
budget. 

Imputations 



Total. 



1.4 

.7 

.1 

6.1 

36.2 

ZO 

182.9 

3.0 

14.1 

7.7 

251.3 

14.5 

3.8 

Z6 

30.7 

2.2 

19.9 

110.5 

5.0 

2 

6.0 

20.0 
23.9 
12.9 

-7.0 

-16.0 
-6.2 

728.4 




728.4 











1.3 



.1 


.2 

1.8 



.1 
.3 
.1 





.1 
.3 



5.0 




5.0 



17.2 


17.2 








1.8 

-.4 

.1 



.4 









.7 
-.1 






-.1 
2.1 






5.1 

14.3 


19.4 




-2.4 



-2.2 




-2.2 







.7 
-.1 







1.3 











-.8 









16.9 
16.9 










.2 
.1 
.1 





-.5 

3.9 



1.6 


.1 

-1.6 




3.4 
.5 



6.2 


3.6 

17.6 



1.1 


18.7 






.1 
-.8 



-1.8 


-2.6 










.5 






.1 
.1 
.1 

1.6 

-.1 


.3 


.2 

-15.8 









1.2 



-.3 
-12.9 

12.9 






1.4 

.7 

.1 

3.6 

34.4 

ZO 

182.2 

3.0 

13.4 

7.2 

253.2 

10.9 

5.1 

2.6 

30.2 

2,3 

19.1 

125.4 

4.9 

.3 

6.0 

23.9 

24.4 

9.7 



-16.0 


749.9 

-10,8 

16.9 
755.9 






.3 


166.3 



3.3 














1.8 

.2 



172.0 



15.4 
187.3 



1.4 
.7 
.1 


12.9 

1.5 



3.0 
.8 

2.4 

8.7 



3.8 
2.4 
1.9 
1.1 
5.3 
4.2 
.9 
.2 
5.9 

2.3 

8.1 
4.5 






72.7 

3.4 

1.0 
77.1 








9.6 



15.8 



5.0 

207.6 



.1 

22.9 
.2 

.4 
1.2 




19.2 

16.2 

6.4 






304.7 

.1 

.9 
305.6 






3.7 

.6 


.1 



1.0 



.2 





1.0 













7.1 




7.2 








.4 

5.2 
.5 
.2 

-.1 

7.7 

1.8 
35.8 

4.2 

1.3 
.2 

5.3 


10.8 

4.6 

4.0 


.1 


.1 
1.3 



83.4 




83.4 



-.9 
.6 

-.1 





-.1 





-.9 

-.2 




115.4 

.1 




-16.0 


96.8 

-14.2 

-.4 
82.2 











5.5 



-.3 





-.3 



7.1 

C 


.2 


2.5 





.4 

-1.9 






13.2 



-.1 


13.0 



1. Also includes "Less: Wage accruals less disbursements," which were -$16 million in 1982. 

2. Includes capital gains and losses, and transactions of certain Federal employee benefit funds. 



18 Governynent Transactions. 



J^ovemher 1988 



Authority retirement fund, the Federal Reserve Board 
retirement fund, and several deposit funds held by the 
Ti-easur>'. 

Coverage of transactions. — The budget refers to 
actual transactions; the NIPA's include imputations. 
In receipts, imputations are made for the Federal Gov- 
ernment's contributions as an employer to the follow- 
ing programs: Military retirement, workers' compen- 
sation, military medical insurance, unemployment in- 
surance for former Federal employees, and several 
small unfunded Federal retirement programs. (In 
each case, an equal imputation is made in expendi- 
tures; the surplus or deficit is not affected.)^ 

Netting and grossing. — ^The "netting and grossing 
differences" in table II-l reflects three kinds of diflFer- 
ences in the way a transaction is recorded. For all 
three, the surplus or deficit is not affected because 
equal adjustments are made in receipts and expen- 
ditures. 

First, the budget nets certain receipts against out- 
lays, and the NIPA's record a receipt. This difference 
occurs, for example, in the case of medicare supple- 
mentary medical insurance premiums, where the pre- 
miums are netted against outlays in the budget. The 
budget's netting reflects the view that the proceeds are 
income from a business-type transaction and are thus 
not included in receipts. The NIPA's record a contri- 
bution for social insurance. The grossing adjustments 
raise NIPA receipts and expenditures relative to their 
budget coiinterparts. 

Second, in some cases the budget records a re- 
ceipt, and the NIPA's record an offset against expen- 
ditures. This difference occurs, for example, in the 
case of the windfall profit tax on Federal sales of crude 
petroleum; the taxes are recorded in the budget as ex- 
cise taxes, but they are netted against expenditures in 
the NIPA's. The netting adjustments lower NIPA re- 
ceipts and expenditures relative to their budget coun- 
terparts. 

Third, for some transactions between agencies, the 
budget does not record a receipt; instead, it records 
an outlay and an offset against outlays. The NIPA's 
record both an expenditure and a receipt. This differ- 
ence in recording occurs for contributions made by the 
Federal Government to social insurance funds for Fed- 
eral employees. In the budget, each agency records its 
outlays for this purpose and then, before total outlays 
are calculated, the employer contributions are sub- 
tracted as an "undistributed offsetting receipt." This 
offsetting pair of entries reflects the budget view of 
these transactions as intragovernmental transactions. 
The grossing adjustments in receipts and in expendi- 
tures raise the NIPA measures relative to their budget 
counterparts. 

Timing. — Receipts are recorded in the budget on a 
cash — that is, when-received — ^basis. NIPA receipts 



are recorded on either a payments — that is, when- 
paid — basis or on an accrual basis. In general, the 
NIPA's record receipts from the personal sector on a 
payments basis and from the business sector on an 
accrual basis. Consequently, personal taxes and non- 
taxes and personal contributions for social insurance 
are recorded on a payments basis. Corporate profits 
taxes, indirect business taxes and nontaxes, and em- 
ployer contributions for social insurance are recorded 
on an accrual basis. Because of lags between when 
a liability (accrual) is incurred or a payment is made 
and when the payment is received, receipts recorded 
in the budget for one period may be after the period 
needed for the NIPA's. 

Differences between outlays and 
expenditures 

Columns 2-9 in table II-2 show the differences in 
coverage, netting and grossing, and timing between 
outlays in the budget and NIPA expenditures. Column 
10, as will be explained, ensures that all transactions 
between agencies have been accounted for. 

Coverage of transactors. — ^A geographic difference 
of the same type as discussed for receipts exists for 
expenditures. In principle, the expenditures that are 
excluded from the NIPA's — largely transfer payments, 
grants-in-aid, and subsidies to U.S. territories and 
Puerto Rico — could be treated as payments to the rest- 
of-the-world sector; however, this treatment is not im- 
plemented. 

In addition, differences relating to a number of other 
transactors existed prior to 1986. Various entities 
were considered "off-budget" under provisions of law. 
For example, the Federal Financing Bank, the Postal 
Service, the Synthetic Fuels Corporation, and the 
lending activities of the Rural Electrification Admin- 
istration were off-budget until their status changed in 
1986.2 

Coverage of transactions. — ^The budget includes 
net lending (new loans less repayments) and net 
transactions in land (purchases less sales) as outlays. 
(Bonuses paid from drilling rights on the Outer Con- 
tinental Shelf are considered sales of land.) NIPA ex- 
penditures do not include these transactions because 
they are an exchange of existing assets rather than 
current income or production. In addition, the budget 
includes certain other financial transactions such as 
capital gains and losses of the Exchange Stabilization 
Fund; the NIPA's do not include them. 

As explained in describing the differences between 
budget and NIPA receipts, the budget refers to actual 
transactions and does not include imputations. The 
column labeled "imputations" in table II-2 accounts 
for the imputations discussed under receipts; tables 



1. In NIPA table 3.17B, these imputations are included as a netting and 
groesing difFerence. 



2. The Balanced Budget and Emergency Deficit Control Act of 1985 — 
better known as the Gramm-Rudman-Hollings Act — places social security 
"off-budget" to exempt social security from sequestration. Social security, 
however, is included in the budget for purposes of estimating the deficit. 



Government Transactions. 



November 1988 



19 



II- 1 and II-2 show identical amoiints for these ac^ust- 
ments. In addition, expenditures include imputations 
for services furnished without payment by depository 
institutions (that is, financial intermediaries except 
life insurance carriers and private noninsured pen- 
sion funds), food furnished to employees, and standard 
clothing issued to military personnel. These three im- 
putations, however, do not affect total expenditures 
because an offsetting imputation is also made. For ex- 
ample, in the case of the imputation for services by 
depository institutions, an imputed purchase of ser- 
vices offsets an imputation for interest received from 
the deposits. In the cases of food and clothing, the 
imputation included in compensation of employees (in 
purchases) offsets an imputed offsetting sale by the 
government (also in purchases). 

Netting and grossing. — ^These differences were 
discussed under receipts. Tables II-l and II-2 show 
identical amounts for this adjustment. 

Timing. — ^The budget records outlays, except inter- 
est on the public debt, on a cash — that is, when-paid — 
basis; interest on the public debt is on an accrual ba- 
sis. In the NIPA's, expenditures are to be recorded as 
follows: 



Expenditure category Timing basis 

Purchases: 

Compensation accrual 

Other delivery 

Transfer payments payment 

Grants-in-aid payment 

Net interest paid accrual 
Subsidies: 

Agricultural pajrment 

Other accrual 

Current surplus of government accrual 
enterprises 



For purchases other than compensation, as the timing 
basis implies, the NIPA's record the expenditure when 
the goods or services are delivered rather than when 
they are paid for. 

In table II-2, the difference labeled "timing" occurs 
in purchases, certain subsidies, and the current sur- 
plus of government enterprises. The largest timing 
difference is for national defense purchases. This dif- 
ference usually involves long-term production items, 
such as missiles and aircraft, for which the work in 
progress is considered as part of business inventories 
until the item is completed and delivered to the Gov- 
ernment. 

Intragovemmental transactions. — ^The budget 
records certain transactions as an expenditure of one 
agency and as a receipt deducted from the expendi- 
tures of the receiving agency. For example, agencies 
pay interest to the Department of the Treasury as the 
result of their borrowing from the Treasury. This col- 
umn in table II-2 is not, therefore, a difference between 
NIPA expenditures and the budget; instead, it ensures 



that all intragovemmental transactions have been ac- 
counted for in an agency -by-agency derivation of NIPA 
expenditures. 

Derivation of receipts 

Receipts estimates are prepared by kind-of-receipt 
category as shown in the budget. For most categories, 
the estimates are not based directly on budget data; 
instead, to achieve the required timing basis, they are 
based largely on other information from Federal agen- 
cies. The most widely used source of other informa- 
tion is from tabulations of tax returns prepared by the 
Internal Revenue Service (IRS) and other administer- 
ing agencies. For example, tabulations of corporate 
income tax returns are used in the derivation of cor- 
porate profits tax accruals; tabulations of excise tax 
returns are used in the derivation of excise taxes; and 
tabulations of returns filed by employers for many so- 
cial insurance programs, such as social security, are 
used in the derivation of contributions for social in- 
surance. Budget data are used for personal tax and 
nontax receipts (including estate and gift taxes), for 
customs duties, and for smaller social insurance pro- 
grams, such as supplementary medical insurance. In 
addition, imputed NIPA receipts, such as employer 
contributions for military retirement, are prepared in 
conjunction with the expenditure estimates. 

Budget data are available monthly, usually in the 
MTS [77]; tax return data are available quarterly for 
certain taxes, such as excise taxes, and for the cal- 
endar year for other taxes, such as corporate taxes. 
These data — which are available in time for the first 
July revision — are used to prepare quarterly — and for 
some receipts, monthly — not seasonally adjusted es- 
timates; for taxes for which only annual data are 
available, the quarterly and monthly not season- 
ally adjusted estimates are derived by interpolation. 
The quarterly not seasonally adjusted estimates are 
summed to obtain calendar year estimates. For es- 
timates that show seasonality, the Census X-11 sea- 
sonal adjustment procedure is usually used. 

Current quarterly and monthly estimates for most 
receipts are extrapolations of the most recent data us- 
ing NIPA income estimates and other relevant data as 
indicators. For the rest, such as nonwithheld income 
taxes and nontaxes, the estimates are judgmental ex- 
trapolations. 

Derivation of expenditures 

Expenditure estimates are prepared by program — 
that is, by activity for which there is a line item in the 
budget, of which about 570 are analyzed separately 
for the NIPA estimates. These analyses draw on data 
from the Budget and related documents supplemented 
by data from Treasury financial reports and reports of 
the agencies administering the programs. For most 
programs, the fiscal year analysis begins by adjusting 
budget outlays for coverage and for netting and gross- 



20 Government Transactions. 



Jslovember 1988 



Table 11-3. — Special Supplemental Food Program: Fiscal Year 

Analysis 

[Millions of dollars] 



Line 




Fiscal 
year 
1982 


1981 


1982 


Source 


IV 


1 


II 


III 


1 




929.8 


191.7 


242.0 


248.0 


248.1 


MTS. 


? 


less; U.S. terrrtories 


25.1 


5.2 


6.5 


6.7 


6.7 


Federal Aid to 






States. Fiscal Year 
1982 (Treasury). 


3 


Equals: Total NIP A 
expenditures. 


904.7 


186.5 


235.5 


241.3 


241.4 




4 


Less. Grants-in-aid to 
State and local 
governnnents. 


881.0 


181.6 


229.3 


235.0 


235.1 


Unpublished detail 
supporting Budget 
of the Ur)ited 
States 

Government: 
Special Analyses, 
Fiscal Year 1984. 
Adjusted for grants 
to territories. 


5 


Equals: Nondefense 
purchases. 


23.7 


4.9 


6.2 


6.3 


6.3 





ing differences between these outlays and NIPA expen- 
ditures. The expenditures total (as adjusted) for a pro- 
gram is then classified by type of NIPA expenditure — 
that is, transfer payments, interest paid, etc. — with 
nondefense purchases determined residually. 

This procedure is illustrated in table II-3, using the 
Department of Agriculture's special supplemental food 
program. As shown in the table. Budget outlays were 
$929.8 million for fiscal year 1982. A Treasury report. 
Federal Aid to States [75], showed that $25.1 million 
was paid to U.S. territories, which are excluded fi:-om 
the NIPA's, as grants-in-aid. Thus, total NIPA expen- 
ditures were $904.7 million. Unpublished budget data 
fi*om 0MB show that $881.0 million was grants-in-aid 
to State and local governments. Because budget de- 
scriptions of the program did not indicate any other 
types of expenditure, the remaining $23.7 million was 
recorded as nondefense purchases of goods and ser- 
vices. 

When a fiscal year analysis is completed, that de- 
tailed array of NIPA expenditures by program and by 
type of expenditure serves as a set of control totals 
for the quarterly estimates. The method most fi*e- 
quently used to derive quarterly estimates by type of 
expenditure for a program is to prorate the quarterly 
MTS outlays by the fiscal year relationships developed 
for that program. For example, in table II-3, grants- 
in-aid for the fiscal year are 94.8 percent of outlays. 
That percentage is applied to each quarter of the fis- 
cal year to estimate quarterly grants-in-aid; nonde- 
fense purchases are the residual. Proration is not used 
when outlays are dominated by a fluctuating element, 
such as lending, that is not included in the NIPA's or 
when information that is a significant improvement 
over proration, such as for the Commodity Credit Cor- 
poration (CCC), is available from the operating agency. 
In the first case, the NIPA expenditure estimates are 
judgmental extrapolations. In the second case, a de- 



tailed analysis is performed using the agency data to 
derive the NIPA estimates. 

With few exceptions, the data for a fiscal year analy- 
sis are available in time for the first July revision. For 
quarterly estimates that show seasonality, the Census 
X-11 seasonal adjustment procedure is usually used. 

For the current quarterly estimates, the advance 
estimates of nondefense purchases except the CCC 
are based on 2 months of MTS outlays in conjunction 
with relationships derived in the fiscal year analysis; 
3 months of MTS outlays are available for the pre- 
liminary and final estimates. Parts of the advance 
estimate of defense purchases are extrapolations us- 
ing MTS outlays, other indicators, or judgment; the 
other parts are based on data underlying the budget 
and agency data. By the final estimate, the bulk of 
defense purchases except compensation is based on 
agency data. CCC inventory change is based on agency 
data supplemented by judgment. For transfer pay- 
ments, most advance estimates are judgmental extrap- 
olations; by the preliminary and final estimates, some 
data become available. For grants-in-aid, MTS out- 
lays are used in the same way as for most nondefense 
purchases. For net interest, subsidies, and the current 
surplus, the estimates are largely judgmental extrap- 
olations. 

Constant-dollar estimates of purchases 

Constant-dollar estimates of purchases of goods and 
services are prepared either by deflation, by extrapola- 
tion of base-year values, or by direct pricing. The data 
used for deflation include information on prices paid 
by the Federal Government, producer and consumer 
price indexes published by the Bureau of Labor Statis- 
tics (BLS) [59, 62], construction cost indexes compiled 
by the Census Bureau [37], agricultural prices fi-om 
the Department of Agriculture [22, 26], and average 
hourly earnings from BLS [60]. Employment data are 
used to extrapolate base-year compensation and ser- 
vices furnished without payment by depository insti- 
tutions. Quantities of agricultural commodities, cer- 
tain petroleum transactions, and a variety of military 
goods and some services are directly priced. 



Derivation of Receipts 

The NIPA categories of Federal receipts, as indi- 
cated earlier, are derived fi^om budget data and other 
information from Federal agencies as part of the fis- 
cal year analysis. These data are adjusted for cover- 
age and for netting and grossing differences, as shown 
in table II- 1, to put them on a basis consistent with 
NIPA concepts. The sources and methods used to de- 
rive NIPA receipts yield the required timing basis; the 
timing difference shown in table II- 1 is calculated as 



Government Transactions. 



J^ovember 1988 



21 



the difference between budget receipts and NIPA re- 
ceipts. 

Within the control totals derived from the fiscal year 
analysis, estimates of receipts are prepared using the 
sources shown in table II-4. The table shows, for de- 
tailed receipts categories, the source data for the first 
July revision and for the current estimates. The col- 
umn for the first July revision describes calendar year 
and quarterly estimates. The column for current es- 
timates describes quarterly estimates for all the re- 
ceipts categories and monthly estimates for those in 
the personal income and outlay account. When the 
source data are listed as monthly, it is to be assumed 
that monthly estimates are summed to quarterly and 
calendar year estimates. Similarly, when the source 
data are listed as quarterly, it is to be assumed that 
the quarterly estimates are summed to calendar year 
estimates. When the source data are listed as annual 
(either calendar or fiscal year), the method used to 
obtain quarterly (or monthly) estimates is also listed. 
The table also indicates the seasonal adjustment pro- 
cedure. 

The seasonally adjusted estimates of receipts are 
prepared using one of three procedures. For each, the 
initial effects of tax law changes, when significant, are 
estimated separately and added to the seasonally ad- 
justed estimates. The three procedures are as follows: 
(1) For taxes and contributions for which the quar- 
terly (or monthly) pattern of payments or liabilities 
reflects fluctuations in the tax or contributions base, 
the seasonally adjusted estimates are prepared by in- 
terpolating and extrapolating the annual estimates us- 
ing a measure of the base as an indicator. An ex- 
ample of the use of this approach is personal with- 
held income taxes, which are interpolated and extrap- 
olated using as the indicator the monthly seasonally 
adjusted NIPA wages and salaries less those of farm 
and private household workers. (2) For taxes or con- 
tributions for which the quarterly (or monthly) pattern 
reflects less specific sources of variation or for which 
the choice of an indicator is less straightforward, the 
seasonally adjusted estimates are prepared using the 
Census X-11 seasonal adjustment procedure to adjust 
the quarterly (or monthly) data directly. An example 
of the use of this approach is estate and gift taxes. 
(3) For taxes for which quarterly (or monthly) obser- 
vations show no seasonality and for receipts for which 
there are no quarterly (or monthly) data, the season- 
ally adjusted estimates are prepared by interpolating 
the annual estimates without an indicator and extrap- 
olating the current quarterly estimates judgmentally. 
Examples of the use of this approach are personal non- 
withheld income taxes (that is, declarations and final 
settlements less refunds) and all nontaxes. 

Personal tax and nontax receipts 

Personal tax and nontax receipts are estimated at 
the level of detail shown in table II-4. 



Income taxes 

Income taxes are estimated in two parts: Withheld 
taxes, and declarations and final settlements less re- 
funds. Withheld income taxes are directly withheld 
at the source, largely by employers, from wages and 
salaries. Declarations (that is, estimated tax pay- 
ments) are paid quarterly, largely on income not sub- 
ject to withholding. Final settlements are any addi- 
tional taxes paid with the filing of tax returns and 
from audits. Refunds are the return to the taxpayer 
of excess taxes paid, including excess social security 
contributions for individuals holding more than one 
job, and any interest paid on the refunds. 

Withheld income taxes. — ^Withheld taxes are from 
the MTS [77] and are the sum of three pieces: With- 
held individual income taxes, withheld social security 
taxes (including employer taxes), and the employer so- 
cial security tax for Federal employees (included in 
undistributed offsetting receipts). Monthly data are 
summed to derive a quarterly estimate of cash-basis 
withheld social security and income taxes. 

An estimate of combined NIPA social security and 
income tax payments is derived by lagging approxi- 
mately 9 percent of each quarter's cash-basis receipts 
to the prior quarter. The percentage to be lagged is ad- 
justed when legislation changes the payment schedule 
required of employers. 

An estimate of withheld social security taxes is sub- 
tracted from the combined estimate to obtain an es- 
timate of NIPA withheld income taxes. The estimate 
of withheld social security taxes (including those for 
Federal employees) is from Social Security Adminis- 
tration (SSA) tabulations of tax returns filed by em- 
ployers [57]. (Until 1987 the MTS data mentioned ear- 
lier did not include social security contributions from 
State and local governments. The data from SSA for 
years prior to 1987 are adjusted to provide an estimate 
of contributions conforming to coverage of the MTS.) 

The estimate of withheld income taxes is prepared 
quarterly; quarterly not seasonally adjusted estimates 
are summed to calendar year estimates. 

Monthly and quarterly seasonally adjusted esti- 
mates of withheld income taxes are prepared by in- 
terpolating the calendar year estimates using NIPA 
seasonally adjusted wages and salaries less those of 
farm and private household workers as the indicator. 
Allowance is made for changes in the withholding rate 
schedule. Current estimates are extrapolations using 
the same indicator. 

Declarations and final settlements less 
refunds. — Declarations and final settlements are to- 
gether often referred to as nonwithheld income taxes. 
Monthly NIPA nonwithheld taxes are from the MTS 
[77] and are the sum of three pieces: Other in- 
come taxes, presidential election campaign fund col- 
lections, and social security taxes vmder the Self- 
Employment Contributions Act (SECA). Monthly esti- 
mates are summed to obtain quarterly estimates. An 



22 Government Transactions. 



JSlovemher 1988 



Table 11-4. — Federal Government Receipts: Sources of Estimates 



Line 



Category 



Calen- 
dar year 

1982 
(billions 

of 
dollars) 



Procedure used to prepare 
seasonally adjusted estimates 



First July revision: Quarterly 
and calendar year estimates' 



Current quarterly and, when 
applicable, monthly estimates 



8 

9 

10 

11 

12 
13 



14 



15 
16 



17 



18 
19 



20 
21 
22 



23 
24 

25 

26 
27 

28 

29 



Receipts . 



Personal tax and nontax 
receipts. 

Income taxes 

Withheld 



Declarations and final 
settlements less refunds. 



Estate and gift taxes , 



Nontaxes ■ 



Corporate profits tax accruals 

Federal Reserve banks 



Other. 



Indirect business tax and 
nontax accruals. 

Excise taxes 

Alcohol 



Tobacco . 



Windfall profit tax . 
Gasoline 



Telephone and telegraph. 



Coal 

Nuclear fuel 



Diesel fuel.... 
Air transport. 
Other^ 



Customs duties 
Nontaxes" 



635.3 
304.5 

296.5 
265.6 

30.9 
7.6 



49.0 
15.2 

33.8 
48.1 



32.7 
5.4 



2.5 



15.7 
4.1 



Contributions for social 
insurance. 

Employer contributions 

Old-age, survivors, disability, 
ana hospital insurance. 
Old-age, survivors, and 

disability insurance. 
Hospital insurance 



.6 
1.4 
2.0 



8.6 



6.8 



233.7 

130.8 
86.0 

69.2 

16.8 



Interpolated and extrapolated 
using W&S as indicator. 

Interpolated without indicator 
and extrapolated 
judgmentally. 

Multiplicative X-1 1 for quarters 
and interpolated without 
indicator for months. 

Interpolated without indicator 
and extrapolated 
judgmentally. 



See corporate profits 
methodology paper. 

See corporate profits 
methodology paper. 



Multiplicative X-11; 
interpolated without 
indicator or extrapolated 
judgmentally. 

Multiplicative X-11 

NSA = SA 

Multiplicative X-11 



Interpolated using personal 
consumption expenditures 
for telephone services as 
indicator. 

NSA = SA 

NSA = SA 

NSA = SA 

NSA = SA 

Interpolated without indicator 

and extrapolated 

judgmentally. 

Multiplicative X-11 

Interpolated without indicator 
and extrapolated 
judgmentally. 



Interpolated and extrapolated 
usmg W&S as indicator. 



MTS data less SSA withheld 

social security. 
MTS data less SSA 

nonwithheld social security 

and IRS refunds. 

MTS gross receipts less IRS 
refunds. 



Budget data; FY estimates 
interpolated using MTS 
receipts as indicator or 
interpolated without 
indicator. 



See corporate profits 
methodology paper. 

See corporate profits 
methodology paper. 



IRS FY receipts, interpolated 
using withdrawals from 
bonded warehouses. 

IRS FY receipts, interpolated 
using withdrawals from 
bonded warehouses. 

SO/ liabilities 

IRS quarterly liabilities; 
calendar year interpolated 
using DOE gasoline 
production as indicator. 

IRS quarterly liabilities 



IRS quarterly liabilities 

Unpublished detail supporting 
the MTS. 



IRS quarterly liabilities 

IRS quarterly liabilities 

IRS quarterly liabilities 

MTS receipts 

Budget data; FY estimates 
interpolated using MTS 
receipts as indicator or 
interpolated without 
indicator. 



SSA quarterly taxable W&S 
multiplied by tax rate. 

SSA quarterly taxable W&S 
multiplied by tax rate for 
those covered by OASDI. 



Extrapolated using W&S as 

indicator. 
Extrapolated judgmentally, 

guided by budget projection. 



MTS, when available, 
DTS. 



and 



Extrapolated judgmentally, 
guided by budget projection. 



See corporate profits 
methodology paper. 

See corporate profits 
methodology paper. 



Extrapolated using 
withdrawals, when 
available, or judgmentally. 

Extrapolated using 

withdrawals, when 

available, or judgmentally. 
No taxes are currently paid. 
Extrapolated using DOE 

gasoline production as 

indicator. 

Extrapolated using personal 
consumption expenditures 
for telephone services as 
indicator. 

Extrapolated judgmentally. 

Unpublished detail supporting 
the MTS, when available, 
and extrapolated 
judgmentally. 

Extrapolated judgmentally. 

Extrapolated judgmentally. 

Extrapolated judgmentally. 



MTS, when available, and 
DTS. 

Extrapolated judgmentally, 
guided by budget projection. 



Extrapolated using W&S as 
indicator. 



Government Transactions. 



Jslovember 1988 23 



Table 11-4. — Federal Government Receipts: Sources of Estimates — Continued 



Line 


Category 


Calen- 
dar year 

1982 
(billions 

of 
dollars) 


Procedure used to prepare 
seasonally adjusted estimates 


First July revision: Quarterly 
and calendar year estimates' 


Current quarterly and, when 
applicable, monthly estimates 


30 
31 


Unemployment insurance 

State tax 


17.0 
12.8 

3.7 

.2 

.3 

24.3 
9.0 

15.4 
2.0 



.9 
.5 

102.9 
92.9 

86.1 

69.3 

16.9 

6.8 

3.9 

.1 

4.3 
.8 

.7 


Interpolated and extrapolated 
using W&S as indicator. 

Interpolated and extrapolated 
using W&S as indicator. 

Interpolated and extrapolated 
using W&S as indicator. 

Imputation using benefits; see 
table 11-5. 

Regular: Interpolated and 
extrapolated using W&S as 
indicator; Additional: NSA = 
SA. 

Imputation using benefits; see 

table 11-5. 
Interpolated and extrapolated 

using W&S as indicator. 

Interpolated without indicator 

and extrapolated 

judgmen tally. 
Imputation using benefits; see 

table 11-5. 
Imputation using benefits; see 

table 11-5. 

Interpolated and extrapolated 
using W&S as indicator. 


UIS collections, lagged 


Extrapolated using W&S as 

indicator. 
Extrapolated using W&S as 

indicator. 

Extrapolated using W&S as 
indicator. 

Imputation using benefits; see 
table 11-5. 

Regular: Extrapolated using 

W&S as indicator; 

Additional: Extrapolated 

ludqmentally, guided by 

budget projection. 
Imputation using benefits; see 

table 11-5. 

Extrapolated using W&S as 
indicator. 

Extrapolated judgmentally. 

Imputation using benefits; see 

table 11-5. 
Imputation using benefits; see 

table 11-5. 


32 


Federal tax 


UIS annual taxable wages, 
multiplied by tax rates; 
interpolated over quarters 
using State unemployment 
insurance taxable wages. 

RRB annual taxable wages, 
multiplied by tax rate; 
interpolated over quarters 
using MTS receipts. 

Imputation using benefits; see 
table 11-5. 

Regular: MTS receipts; 
Additional: OPM 
contributions. 

Imputation using benefits; see 

table 11-5. 
Regular: RRB annual taxable 

wages, multiplied by tax 

rate;. 
Supplemental: FY receipts 

adjusted to annual estimate. 

Total interpolated over 

quarters based on MTS 

receipts. 

VA financial reports 


33 


Railroad employees 


34 


Federal employees 


35 
36 


Federal employee retirement.. 
Civilian 


37 


Military 


38 


Railroad retirement 


39 


Veterans life insurance 


40 


Workers' compensation 


Imputation using benefits; see 

table 11-5. 
Imputation using benefits; see 

table 11-5. 


41 
42 


Military medical insurance 

Personal contributions 


43 

44 


Old-aae, survivors, disability, 
ana hospital insurance. 
Employees 


Extrapolated using W&S as 
indicator. 


45 


Old-age, survivors, and 
disability insurance.. 
Hospital insurance 


SSA quarterly taxable W&S 
multiplied by tax rate. 

SSA quarterly taxable W&S 
multiplied by tax rate for 
those covered by OASDI. 

SSA annual taxable earnings 
multiplied by tax rale andf 
allocated to quarter of 
payment. 

MTS receipts 


4fi 






47 


Self-employed 


Calendar year divided by 12 

Interpolated without indicator 

and extrapolated 

judgmen tally. 
Interpolated and extrapolated 

using W&S as indicator. 

Interpolated and extrapolated 
using W&S as indicator. 

Interpolated and extrapolated 
using W&S as indicator. 

Interpolated without indicator 
and extrapolated 
judgmen tally. 


Extrapolated judgmentally, 
guided by budget projection. 

Extrapolated judgmentally. 


48 


Supplementary medical 
insurance. 

State unemployment 
insurance. 

Federal civilian employee 

retirement. ^ 
Railroad retirement 


49 


UIS taxable earnings from 
States, multiplied by tax 
rate. 

MTS receipts 


guided by budget projection. 

Extrapolated using W&S as 
indicator. 

Extrapolated using W&S as 

indicator. 
Extrapolated using W&S as 

indicator. 

Extrapolated judgmentally. 


51 


RRB annual taxable wages, 

multiplied by tax rate; 

interpolated over quarters 

using MTS receipts. 
VA premium payments 


5? 


Veterans life insurance 









1. Except as noted, the estimates for later revisions have the sanoe sources. 

2. Inclucjes passport ancj immigration fees, certain other fees, fines, migratory bird-hunting 
stamps, and gifts to U.S. government funds. 

3. Includes the use tax on certain vehicles and excise taxes on trucks, buses, trailers, tires, 
inner tubes, tread rubber, certain sporting goods, firearms, production of the chemical and oil in- 
dustries ("Superfund"). and wagering. 

4. Includes royalties from petroleum production on the Outer Continental Shelf, other royalties, 
rents, fees to various regulatory agencies, fines, penalties, forfeitures, and donations to govern- 
ment funds. 



DOE 
DTS 



U.S. Department of Energy. 
Daily Treasury Statement. 



IRS Internal Revenue Service, U.S. Department of the Treasury. 

MTS Monthly Treasury Statement. 

NSA Not seasonally adjusted. 

RRB Railroad Retirement Board. 

SA Seasonally adjusted. 

SOI Statistics of Income Bulletin. 

SSA Social Security Administration, U.S. Department of Health and Human Services. 

UIS Unemployment Insurance Sen/ice, U.S. Department of Labor. 

VA Veterans' Administration. 

W&S Wages and salaries. 

X-11 Census Bureau seasonal adjustment proc»dure. 



24 Government Transactions. 



Jslovemher 1988 



estimate of SECA taxes based on tax return tabula- 
tions from SSA [57] is subtracted from the combined 
estimate. An excise tax on private foundations — a tax 
on the income of such institutions — is then added; the 
tax on private foundations is based on collections re- 
ported in IRS excise tax data [81]. The resulting quar- 
terly not seasonally adjusted estimates are summed to 
obtain calendar year estimates of nonwithheld income 
taxes. 

The IRS provides monthly data for refunds of in- 
come taxes and excess social security withholdings 
[82]; these data differ from the MTS data because they 
include interest on refunds. Monthly data are summed 
to obtain quarterly not seasonally adjusted estimates, 
and the latter are summed to obtain calendar year es- 
timates. 

For the monthly and quarterly seasonally adjusted 
estimates, the combined estimate of declarations and 
settlements less refunds is interpolated without an 
indicator, with allowance for tax law changes. Cur- 
rent estimates are judgmental extrapolations guided 
by budget projections, with allowance for tax law 
changes. 

Estate and gift taxes 

Estate and gift taxes (gross) are from the MTS [77], 
and refunds (including interest) are from IRS data 
[82]. Monthly data are summed to obtain quarterly 
not seasonally adjusted estimates, and the latter are 
summed to obtain calendar year estimates. 

The gross receipts and refunds are seasonally ad- 
justed separately using the Census X-11 procedure, 
with allowance for tax law changes. The resulting 
quarterly series are interpolated over months without 
an indicator, with allowance for tax law changes. 

For the current quarterly estimates, the advance es- 
timate is based on 2 months of data from the MTS and 
a preliminary third-month estimate from the Daily 
Treasury Statement (DTS) [76]. Three months of MTS 
data are available for the preliminary estimate. All 
monthly estimates are interpolated without an indica- 
tor from the quarterly estimates. 

Personal nontaxes 

Personal nontaxes consist of a wide variety of small 
payments from individuals to the Federal Govern- 
ment. Among them are passport and immigration 
fees, fines paid by persons, and migratory bird-hunting 
stamps. 

Nontaxes for the fiscal year are from budget data 
[4A-2, 79, 80], largely data on miscellaneous receipts 
and proprietary receipts (which, in the budget data, 
are offsets to expenditures). For nontaxes included in 
budget proprietary receipts, the fiscal year estimate 
is interpolated over quarters using the pattern of the 
collecting agency's proprietary receipts from the MTS 
as the indicator; for nontaxes included in budget mis- 
cellaneous receipts, quarterly estimates are interpo- 
lations without an indicator. For the nontaxes not 



included in budget proprietary and miscellaneous re- 
ceipts, quarterly estimates are interpolations without 
an indicator. Quarterly not seasonally adjusted esti- 
mates are summed to obtain calendar year estimates. 
Monthly and quarterly seasonally adjusted estimates 
are interpolations without an indicator and, for the 
current estimates, judgmental extrapolations guided 
by budget projections. 

Corporate profits tax accruals 

See Corporate Profits: Profits Before Tax, Profits Tax 
Liability, and Dividends, BEA Methodology Paper Se- 
ries MP-2 [40], for a discussion of the sources and 
methods for deriving corporate profits tax accruals. 

Indirect business tax and nontax 
accruals 

Excise taxes 

Alcohol excise taxes. — ^The IRS tabulates alcohol 
excise tax receipts for the fiscal year [81]; these data 
are used as the NIPA fiscal year estimate. Quarterly 
not seasonally adjusted estimates are prepared by pro- 
rating the fiscal year data using taxable withdrawals 
from bonded warehouses as the indicator. The with- 
drawal data are from the Bureau of Alcohol, Tobacco, 
and Firearms (BATE) [72, 73]. Estimates are prepared 
separately for domestic distilled spirits, for domestic 
beer, and for all other categories of alcohol. Quar- 
terly not seasonally adjusted estimates are summed 
to obtain calendar year estimates. Excise taxes for do- 
mestic distilled spirits and for domestic beer are sea- 
sonally adjusted using the Census X-11 procedure; for 
all other alcohol excise taxes, the quarterly season- 
ally adjusted estimates are interpolations without an 
indicator. Current quarterly estimates are extrapola- 
tions using taxable withdrawals as the indicator, when 
available, or judgmental extrapolations; data on tax- 
able withdrawals are available 60 days after the end 
of the month. 

Tobacco excise taxes. — The IRS tabulates tobacco 
excise tax receipts for the fiscal year [81]; these data 
are used as the NIPA fiscal year estimate. Quarterly 
not seasonally adjusted estimates are prepared by pro- 
rating the fiscal year data using taxable withdrawals 
of small cigarettes from bonded warehouses as the in- 
dicator. The withdrawal data are from the BATE [74]. 
Quarterly not seasonally adjusted data are summed 
to obtain calendar year estimates. Quarterly season- 
ally adjusted estimates are prepared using the Cen- 
sus X-11 procedure. Current quarterly estimates are 
extrapolations using taxable withdrawals as the indi- 
cator, when available, or judgmental extrapolations; 
data on taxable withdrawals are available 60 days af- 
ter the end of the month. 

Windfall profit tax. — The windfall profit tax, in 
effect from 1980 to 1988, was a per-barrel tax on 
petroleum production. The Federal Government also 



Government Transactions. 



Jslovemher 1988 25 



"taxed" the royalties it received on the production of oil 
on the Outer Continental Shelf and on sales from the 
Naval petroleum reserve; these "taxes" are not consid- 
ered taxes in the NIPA's. In the NIPA's, the wind- 
fall profit tax records liabilities only on private and on 
State and local government petroleum production. 

The IRS tabulated the windfall profit tax liability 
from quarterly tax returns filed by producers [83]. 
These data, less Federal liability, are used as the NIPA 
quarterly liability estimate. Quarterly not seasonally 
adjusted data are used as the seasonally adjusted es- 
timates. Quarterly estimates are summed to obtain 
calendar year estimates. No taxes are currently paid. 

Other excise taxes. — The IRS tabulates liabilities 
for all of the other types of excise taxes from tax re- 
turns that are filed in the quarter following the lia- 
bility [81]. With two exceptions, the NIPA quarterly 
not seasonally adjusted estimates are derived by lag- 
ging the IRS data one quarter. Refunds, on a cash 
basis, are from IRS [82] and include interest; they are 
subtracted from the "other" excise tax category. Quar- 
terly estimates are summed to obtain calendar year 
estimates. The two exceptions to this procedure are 
for the excise taxes on gasoline and on nuclear fuel. 
The quarterly gasoline excise tax is interpolated from 
the calendar year estimate using data from the En- 
ergy Information Administration, Department of En- 
ergy (DOE), for gasoline production [53] as the indica- 
tor, and the excise tax on nuclear fuel is from unpub- 
lished detail supporting the MTS. 

Quarterly seasonally adjusted estimates of the gaso- 
line excise tax are derived using the Census X-11 pro- 
cedure. Quarterly seasonally adjusted estimates of the 
telephone and telegraph excise tax are interpolated 
from the calendar year estimate using personal con- 
sumption expenditxires (PCE) for telephone services 
as the indicator. For most of the other types of ex- 
cise taxes, quarterly not seasonally adjusted data are 
used as the seasonally adjusted estimates. 

Current quarterly estimates for gasoline excise 
taxes are extrapolations using DOE gasoline produc- 
tion as the indicator. Telephone and telegraph excise 
taxes are extrapolations using PCE for telephone ser- 
vices as the indicator. Current quarterly estimates for 
most of the other types of excise taxes are judgmental 
extrapolations. 

Customs duties 

MTS data on gross customs duties less refrinds [77] 
are used as the NIPA liability estimate. Quarterly not 
seasonally adjusted data are summed to obtain cal- 
endar year estimates. Quarterly seasonally adjusted 
estimates of gross receipts and refunds are prepared 
using the Census X-11 procedure. 

For the current quarterly estimates, the advance es- 
timate is based on 2 months of MTS data and a prelim- 
inary third month from the DTS [76]. Three months of 
MTS data are available for the preliminary estimate. 



Indirect business nontaxes 

Indirect business nontaxes consist of a wide variety 
of payments by business to the Federal Government. 
Among them are royalties from petroleum production 
on the Outer Continental Shelf and fines. 

Nontaxes for the fiscal year are from budget data 
[4A-2, 79, 80], largely data on miscellaneous receipts 
and proprietary receipts (which, in the budget data, 
are offsets to expenditures). For nontaxes included in 
budget proprietary receipts, the fiscal year estimate 
is prorated over quarters using the collecting agency's 
proprietary receipts from the MTS as the indicator; for 
nontaxes included in budget miscellaneous receipts, 
quarterly estimates are interpolations without an indi- 
cator. For most of the nontaxes not included in budget 
proprietary and miscellaneous receipts, quarterly esti- 
mates are interpolations without an indicator. Quar- 
terly not seasonally adjusted estimates are summed 
to obtain calendar year estimates. Quarterly season- 
ally adjusted estimates are interpolations without an 
indicator and, for the current estimates, judgmental 
extrapolations guided by budget projections. 

Contributions for social insurance 

Table II-4 lists contributions by program for the 
various social insurance programs, separately for em- 
ployer contributions and for personal contributions, as 
they are shown in NIPA table 3.6. The descriptions 
that follow are by program only, because the method- 
ology is the same for employer and personal contribu- 
tions in programs that have both. 

Old-age, survivors, and disability insurance 
(OASDI) 

Employer and employee contributions. — ^The 
old-age and survivors insurance (OASI) trust fund 
makes benefit payments to eligible retired workers 
and to their survivors. The disability insurance (DI) 
trust fund makes benefit payments to eligible disabled 
workers. These funds, which are better known as so- 
cial security, are financed by contributions based on 
taxable wages and salaries and on the taxable earn- 
ings of the self-employed. (Contributions by the self- 
employed are discussed next.) Workers covered by 
OASDI are subject to taxes on all wages and salaries 
until they reach a "maximum taxable earnings" for the 
year. In most cases, the employer and the employee 
pay identical taxes into the trust funds. Employees 
who work for more than one employer may have too 
much OASDI tax withheld. If the combined earnings 
from all employers exceed the maximum for the year, 
the employee is entitled to a refund, which is claimed 
on the tax return for individual income taxes. Budget 
data record these refunds as an offset to OASDI taxes; 
the NIPA's treat the refunds as an offset to personal in- 
come taxes. Calendar year data on wages and salaries 
subject to OASDI taxes are from SSA tabulations of 
tax returns filed by employers and published in the So- 



26 Government Transactions. 



JsJovemher 1988 



cial Security Bulletin: Annual Statistical Supplement 
[57]. These data are adjusted to exclude U.S. terri- 
tories and Puerto Rico, based on data from the same 
source. The remaining taxable wages and salaries are 
multiplied by the tax rate (including that for hospi- 
tal insurance, which is discussed later), separately for 
the employee and employer, to derive calendar year 
estimates of OASDI contributions (including those for 
hospital insurance). 

The SSA also provides unpublished calendar year 
data for tips, which are subject to the employee tax. 
The estimate of taxable tips is multiplied by that tax 
rate and added to the employee contributions previ- 
ously calculated. 

The SSA also provides quarterly not seasonally ad- 
justed taxable wages and salaries, which are multi- 
plied, as described for the calendar year data, by the 
tax rate to derive quarterly not seasonally adjusted 
OASDI contributions. The calendar year estimate of 
contributions from the territories and Puerto Rico is 
interpolated using total quarterly contributions as the 
indicator. The resulting estimate is subtracted from 
total OASDI contributions to derive quarterly not sea- 
sonally adjusted NIPA contributions (including those 
for hospital insurance). 

Monthly and quarterly seasonally adjusted esti- 
mates are interpolations of the calendar year esti- 
mates using a seasonally adjusted variant of NIPA 
wages and salaries as the indicator. The effects of 
changes in the tax rate and the maximum taxable 
earnings, which historically have taken effect in Jan- 
uary, are estimated separately and added to the sea- 
sonally adjusted estimates. 

Current monthly and quarterly estimates are ex- 
trapolations using the variant of NIPA wages and 
salaries as the indicator, with allowance for changes 
in the tax rate or the maximum taxable earnings. 

Employer contributions paid by government — which 
are needed to estimate compensation of government 
employees, a component of government purchases — 
are based on SSA unpublished calendar year estimates 
of taxable wages and salaries for military. Federal 
civilian, and State and local government employees. 
The employer contributions are derived by multiply- 
ing these wages and salaries by the employer tax rate 
(including that for hospital insurance). Quarterly and 
monthly estimates are interpolations without indica- 
tor of the calendar year estimates, modified for pay 
raises and changes in the tax rate or maximum taxable 
earnings. Employer contributions for military employ- 
ees are allocated to general government, and contri- 
butions for Federal civilian employees are allocated 
to civilian general government and enterprises by the 
relationship of wages and salaries in Federal civilian 
general government and in Federal enterprises. Em- 
ployer contributions for State and local employees are 
allocated to general government and enterprises in the 
same manner using the relationship of State and local 
wages. Current quarterly and monthly estimates are 



judgmental extrapolations using the variant of wages 
and salaries as the indicator, modified for pay raises 
and for changes in the tax rate or the maximum tax- 
able earnings. 

Self-employed contributions. — ^The SSA provides 
calendar year estimates of taxable earnings from self- 
employment [57], and these are multiplied by the tax 
rate (including those for hospital insurance). The re- 
sulting estimates of contributions are allocated to the 
quarter of pajmient. Beginning in 1966, the liability 
for each year is assumed to be paid as follows: (1) 
30 percent in quarterly declarations, with equal pay- 
ments made in April, June, and September of the tax 
year and in January of the following year; and (2) 70 
percent in final settlements in the following year, with 
25 percent of the final settlements in the first quarter 
and 75 percent in the second quarter. Monthly season- 
ally adjusted estimates are the calendar year estimate 
divided by 12. Current monthly estimates are judg- 
mental extrapolations guided by budget projections. 
Prior to 1966, when the form for estimated income tax 
payments did not include self-employed contributions, 
it was assumed that these liabilities were paid with 
income tax returns in the following year. 

Hospital and supplementary medical 
insurance 

The hospital insurance (HI) and the supplementary 
medical insurance (SMI) trust funds provide what is 
better known as medicare. HI covers care provided 
by hospitals, skilled nursing facilities, home health 
agencies, and hospices and is financed by contributions 
based on taxable wages and salaries. HI is manda- 
tory for all workers covered by OASDI and for certain 
groups of workers not covered by OASDI — ^railroad em- 
ployees, some Federal civilian employees, and some 
State and local employees hired afl^er March 1986. 
SMI, which is optional, covers physician services, hos- 
pital outpatient and laboratory services, treatment for 
end-stage renal disease, and medical equipment. The 
SMI fund is financed by a monthly premium and by 
general revenues. 

All wages and salaries taxable for OASDI (discussed 
earlier) are also taxable for HI. Calendar year and 
quarterly not seasonally adjusted HI contributions are 
derived using the HI tax rate in the same manner as 
described for the OASDI estimates. Of the gi-oups of 
workers not covered by OASDI, the SSA provides cal- 
endar year and quarterly not seasonally adjusted es- 
timates of taxable wages and salaries for Federal and 
for State and local government employees [57]. The 
quarterly taxable wages and salaries are multiplied 
by the HI tax rate to obtain quarterly not seasonally 
adjusted estimates of employer and personal contri- 
butions. The Railroad Retirement Board (RRB) pro- 
vides unpublished calendar year estimates for railroad 
wages and salaries taxable for HI; the calendar year 
estimate is divided by four to obtain quarterly not sea- 
sonally adjusted estimates. 



Government Transactions. 



Jslovember 1988 



27 



Monthly and quarterly seasonally adjusted HI con- 
tributions for those subject to OASDI taxes are derived 
in combination with the OASDI estimates described 
earlier. Monthly and quarterly seasonally adjusted 
HI contributions for the other groups are prepared by 
interpolating the calendar year estimates without an 
indicator and by extrapolating judgmentally. The ini- 
tial effects of changes in the tax rate or the maximum 
taxable earnings are estimated separately and added 
to the seasonally adjusted estimates. 

Employer HI contributions paid by government on 
wages and salaries subject to OASDI taxes — needed 
to estimate compensation of employees — are estimated 
using the same methods as the corresponding OASDI 
contributions discussed earlier. Employer HI contri- 
butions for Federal employees not subject to OASDI 
are allocated to civilian general government and enter- 
prises by the relationship of wages and salaries in Fed- 
eral civilian general government and in enterprises. 
Employer contributions for State and local employees 
not subject to OASDI are allocated in the same man- 
ner using the relationship of State and local wages. 

Supplementary medical insurance premiums are 
from the MTS [77]. SSA provides calendar year pre- 
miums from U.S. territories and Puerto Rico. These 
premiums are interpolated over months using total 
premiums as the indicator and subtracted from total 
premiums to yield NIPA monthly not seasonally ad- 
justed estimates. The monthly estimates are summed 
to calendar year estimates. 

Monthly and quarterly seasonally adjusted esti- 
mates are interpolations of the calendar year estimate 
without an indicator, allowing for increases in the 
monthly premium. Current estimates are judgmen- 
tal extrapolations, guided by budget projections and 
allowing for increases in the premium. 

Unemployment insurance 

Contributions to the unemployment insurance trust 
fund are generated by a State and a Federal tax im- 
posed on wages and salaries paid by most private em- 
ployers and a special Federal tax for the railroad in- 
dustry. Most taxes are on employers; a few States tax 
employees. In the NIPA's, an employer contribution is 
imputed for unemployed former Federal military and 
civilian employees. 

State unemployment tax. — ^The State tax consists 
of (1) taxes paid by most private employers and a few 
State and local governments on wages and salaries 
up to a maximum, (2) taxes paid by employees in 
a few States, and (3) a reimbursement of benefits 
by certain employers — some State and local govern- 
ments and some nonprofit organizations — in lieu of 
paying the regular tax. The maximum taxable earn- 
ings varies from State to State, but cannot be lower 
than the maximum taxable earnings for the Federal 
tax. 

The Unemployment Insurance Service (UIS), Em- 
ployment and IVaining Administration, provides un- 



published data on quarterly taxes paid; these taxes do 
not include the reimbursable amounts. The data are 
lagged one quarter to approximate the liability timing 
used in the NIPA's and summed to a calendar year es- 
timate. An estimate of taxes paid by employers in the 
U.S. territories and Puerto Rico, also based on UIS 
data [63, 65], is subtracted to derive the NIPA es- 
timate. A portion of the NIPA estimate is allocated 
to personal contributions using information from the 
States that tax employees. The reimbursable amoimt 
is an estimate of reimbursable unemployment insur- 
ance benefits discussed in the derivation of expendi- 
tures (see page 44). 

Quarterly seasonally adjusted estimates of employer 
contributions are interpolations of the calendar year 
estimates using seasonally adjusted private wages 
and salaries less those of railroad, farm, and private 
household workers as the indicator. The seasonally 
adjusted reimbursable amount is based on the esti- 
mate of the seasonally adjusted reimbursable benefits. 
The monthly seasonally adjusted estimates of personal 
contributions are interpolations of the calendar year 
using the wages and salaries indicator just mentioned. 
Changes in the tax rate or the maximum taxable earn- 
ings, which regularly occur in January, are estimated 
separately and added to the seasonally adjusted esti- 
mates. 

Current monthly and quarterly estimates of em- 
ployer and personal contributions are extrapolations 
using the private wages and salaries mentioned above 
as the indicator, with allowance for tax changes. The 
current estimate of the reimbursable amount is based 
on the estimate of seasonally adjusted reimbursable 
benefits. 

The regular employer contributions paid by State 
and local governments — needed to estimate compen- 
sation of employees — are based on a BEA tabulation 
of data from UIS and are allocated between general 
government and government enterprises by the rela- 
tionship of State and local wages and salaries in gen- 
eral government and in government enterprises. Most 
of the reimbursable amount paid by State and local 
governments is allocated to general government. 

Federal unemployment tax. — The Federal unem- 
ployment tax has two parts: A national tax at a uni- 
form rate and a State-specific surtax at varying rates. 
All covered employers are subject to the uniform tax 
rate. In addition, in some States that have borrowed 
funds from the Federal Government to finance ben- 
efits, covered employers are subject to a surtax that 
depends on the amount and duration of the State's in- 
debtedness. 

Calendar year estimates are based on unpublished 
taxable wages and salaries, by State, compiled by UIS 
from annual tax returns filed by employers. The tax- 
able wages and salaries are multiplied by the uniform 
tax rate and, for States with a surtax, the taxable 
wages and salaries from that State are multiplied by 
the surtax rate. Information for the individual State 



28 Government Transactions. 



JNovember 1988 



surtaxes is from UIS. Quarterly not seasonally ad- 
justed estimates are interpolations using wages and 
salaries taxable for State unemployment insurance as 
the indicator. 

Quarterly seasonally adjusted estimates are inter- 
polations of the calendar year estimates using season- 
ally adjusted private wages and salaries less those of 
railroad, farm, and private household workers as the 
indicator. Current estimates are extrapolations using 
the same indicator. Changes in the tax rate or the 
maximum taxable earnings are estimated separately 
and added to the seasonally adjusted estimates. 

Railroad employees. — Calendar year estimates 
are based on taxable wages and salaries compiled by 
the RRB [91]. These wages and salaries are multi- 
plied by the Federal railroad unemployment tax rate 
to derive employer contributions for railroad employ- 
ees. Quarterly not seasonally adjusted estimates are 
interpolations using MTS receipts [77] for this pro- 
gram as the indicator. QuEirterly seasonally adjusted 
estimates are interpolations and, for the current esti- 
mates, extrapolations using seasonally adjusted NIPA 
railroad wages and salaries as the indicator. Changes 
in the tax rate or the maximum taxable earnings are 
estimated separately and added to the seasonally ad- 
justed estimates. 

Federal employees. — The estimates of contribu- 
tions are the equivalent of unemployment benefits for 
former Federal employees discussed in the derivation 
of expenditures (see page 44). This imputation is an 
employer contribution and is allocated to civilian gen- 
eral government and government enterprises by the 
relationship of wages and salaries in Federal civilian 
general government and in Federal government enter- 
prises. 

Federal employee retirement 

Civilian retirement. — Federal civilian retirement 
contributions are made to the following: The civil ser- 
vice retirement and disability fund, the foreign ser- 
vice retirement and disability fund, the judicial sur- 
vivors fiind, the Federal Reserve Board fund, and the 
Tennessee Valley Authority (TVA) program. In addi- 
tion, contributions, equivalent to retirement benefits, 
are imputed for the following: Former commissioned 
officers of the Public Health Service, retired Federal 
judges, former lighthouse service personnel and sur- 
vivors, and certain former employees of the National 
Oceanic and Atmospheric Administration. 

Calendar year and quarterly not seasonally adjusted 
estimates of employer and employee regular contribu- 
tions to the civil service fund are from the MTS [77]. 
Additional employer contributions, due at the end of 
the fiscal year to cover certain unfunded liabilities, are 
based on unpublished data from the Office of Person- 
nel Management (0PM) [13K]. These additional con- 
tributions are allocated equally to the four quarters of 
the fiscal year and then summed to calendar year es- 
timates. Calendar year and quarterly not seasonally 



adjusted estimates of employer and employee regular 
contributions to the foreign service fund and to the ju- 
dicial survivors fund are from the MTS [77]. An addi- 
tional contribution to the foreign service fund, from the 
Budget Appendix [4A-2], is similar to that described for 
the civil service fund and is treated in the same man- 
ner. Calendar year contributions for the Federal Re- 
serve Board fund are available from the Board [2], and 
contributions for the TVA program are available from 
the agency [20]; quarterly not seasonally adjusted esti- 
mates for both are interpolations without an indicator. 
Calendar year and quarterly not seasonally adjusted 
estimates for all imputed retirement contributions are 
equivalent to the estimates of benefits for the various 
retirement programs as discussed in the derivation of 
expenditures (see page 45). 

Seasonally adjusted estimates of the regular con- 
tributions are interpolations of the calendar year es- 
timates using seasonally adjusted Federal civilian 
wages and salaries as the indicator. The not sea- 
sonally adjusted additional employer contributions are 
used as the seasonally adjusted estimates. Cur- 
rent monthly and quarterly estimates of the regu- 
lar contributions are extrapolations using the wages 
and salaries series as the indicator; the additional 
employer contributions are judgmental extrapolations 
guided by budget projections. 

The estimates of contributions to the civil service 
retirement fund include contributions for some em- 
ployees of the District of Columbia. Contributions 
for these employees are from the MTS [77] and are 
divided equally as employer and employee contribu- 
tions. A portion of the District of Columbia contribu- 
tion is allocated to State and local general government 
and government enterprises in the same manner as 
for the State unemployment tax. Federal Government 
employer regular contributions are allocated to civil- 
ian general government and enterprises in the same 
manner as for the unemployment contribution. The 
additional Federal employer contribution is allocated 
to civilian general government and government enter- 
prises on the basis of the unpublished data from 0PM. 
The imputations, like the cash contributions to retire- 
ment funds, are a part of Federal employee compensa- 
tion and are allocated to civilian general government 
and enterprises in the same manner described for un- 
employment contributions. 

Military retirement. — Estimates of contributions 
for military retirement, including those for the Coast 
Guard, are imputations based on estimates of retire- 
ment benefits discussed in the derivation of expendi- 
tures (see page 45). All contributions are employer 
contributions by general government. 

Railroad retirement 

Railroad retirement contributions consist of em- 
ployer and employee taxes paid on monthly maximum 
taxable earnings and a separate "supplemental" em- 
ployer contribution based on hours worked. Railroad 



Government Transactions. 



J\Iovember 1988 



29 



retirement contributions include contributions for HI. 
The RRB calculates the required annual HI contribu- 
tion and transfers it to the HI trust fund. 

Calendar year estimates of the combined retirement 
and HI contributions are based on wages and salaries 
subject to railroad retirement and HI taxes from the 
RRB [91]. Taxable wages and salaries are multiplied 
by tax rates to derive employer and employee contri- 
butions for combined retirement and HI. The HI tax- 
able wages are multiplied by the HI tax rate, and this 
estimate is subtracted from the combined estimates 
to obtain the annual estimates for retirement contri- 
butions. Calendar year estimates of the supplemen- 
tal employer contribution are derived by dividing fis- 
cal year estimates from the Budget Appendix [4A-2] 
by four and summing the appropriate quarterly esti- 
mates. 

Monthly and quarterly not seasonally adjusted es- 
timates are interpolations of the calendar year esti- 
mates using the MTS railroad retirement contribu- 
tions data as the indicator. The quarterly not season- 
ally adjusted HI estimates are prepared by dividing 
the calendar year estimate by four; this series is sub- 
tracted from the not seasonally adjusted railroad re- 
tirement contributions and added to HI contributions. 

Monthly and quarterly seasonally adjusted esti- 
mates are interpolations and, for the current esti- 
mates, extrapolations using seasonally adjusted NIPA 
railroad wages and salaries as the indicator. Changes 
in the tax rate or the maximum taxable earnings are 
estimated separately and added to the seasonally ad- 
justed estimates. 

Veterans life insurance 

There are five veterans life insurance programs: Na- 
tional Service Life Insurance, United States Govern- 
ment Life Insurance, the service-disabled insurance 
fund, the veterans special life insurance fund, and the 
veterans reopened insurance fund. The programs are 
funded by premiums paid by veterans and by Federal 
Government payments. 

The Veterans' Administration provides data for 
monthly insurance premiums paid by veterans for all 
programs [93], which are treated as personal contri- 
butions for social insurance. Quarterly not seasonally 
adjusted and calendar year NIPA estimates are the 
sum of the monthly estimates. 

Government payments on behalf of servicemen are 
treated as employer contributions. Currently, these 
payments are small, but were large in the period just 
after World War II. Employer contributions are from 
the Veterans' Administration financial reports [93]. 
Quarterly not seasonally adjusted and calendar year 
NIPA estimates are the sum of the monthly data. All of 
these payments are employer contributions by general 
government. Monthly seasonally adjusted estimates 
are interpolations without indicator and, for the cur- 
rent estimates, judgmental extrapolations. 



Workers' compensation 

The Federal Government pays workers' compensa- 
tion benefits to Federal employees injured on the job. 
All estimates of workers' compensation contributions 
are imputations based on estimates of benefits dis- 
cussed in the derivation of expenditures (see page 45). 
The contributions are employer contributions and are 
allocated judgmentally to general government and en- 
terprises; current allocations are extrapolations. 

Military medical insm*ance 

The Civilian Health and Medical Program of the 
Uniformed Services (CHAMPUS) provides medical 
treatment for dependents of active duty military per- 
sonnel and for military retirees and their dependents. 
Benefits paid are included in transfer payments to per- 
sons. Benefits for dependents of active duty military 
personnel are comparable to health benefits provided 
for civilian employees and their families, which are 
part of other labor income in the NIPA's and therefore 
part of Federal employee compensation. In order to 
make the measure of military compensation compara- 
ble to that of civilian compensation, a social insurance 
contribution is imputed for the portion of CHAMPUS 
providing benefits for dependents of active duty per- 
sonnel. The estimates are imputations based on esti- 
mates of benefits discussed in the derivation of expen- 
ditures (see page 46). The contributions are employer 
.contributions by general government. 



Derivation of Expenditures 

The NIPA categories of Federal expenditures, as in- 
dicated earlier, are derived from budget data supple- 
mented by other information from Federal agencies. 
These data are adjusted for coverage and for netting 
and grossing differences, as shown in table II-2, to 
put them on a basis consistent with NIPA concepts. 
The sources and methods used to derive NIPA expen- 
ditures yield the required timing basis; the timing dif- 
ference shown in table II-2 is calculated as the differ- 
ence between budget outlays and NIPA expenditures. 
Table II-5 shows the sources of estimates for Federal 
Government expenditures. In general, the level of de- 
tail shown is that at which the estimates are prepared; 
where footnoted, the level of detail has been aggre- 
gated to an "other" or "all other" category because the 
methodology is the same for the detailed estimates. 

Purchases of goods and services 

Federal Government purchases of goods and ser- 
vices are estimated for two major categories: National 
defense, and nondefense. The national defense cate- 
gory consists of the purchases of goods and services 
for the activities covered by the national defense func- 
tion in the budget — military activities of the Depart- 



30 Government Transactions. 



Jslovember 1988 



Table li-5.— Federal Government Expenditures: Sources of Estimates 



Line 



6 

7 
8 

9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 

32 
33 



34 



35 

36 
37 

38 
39 



40 
41 



42 

43 
44 

45 

46 



Category 



Expenditures . 



Purchases of goods and 
services. 

National defense 



Nondefense. 



Commodity Credit 
Corporation inventory 
change. 
Acquisitions 

Barley 

Butter 

Cheese 

Corn 

Upland cotton 

Grain sorghum 

Dried milk 

Rough rice 

Soybeans 

Wheat 

All other crops 

Accounting adjustment. 
Less; Dispositions 

Barley 

Butter 

Cheese 

Corn 

Upland cotton 

Grain sorghum 

Dried milk 

Rough rice 

Soybeans 

Wheat 

All other crops 

Accounting adjustment. 
National Aeronautics and 
Space Administration. 
Imputed financial services... 



Other 2 . 



Transfer payments 

To persons 

Benefits from social 
insurance funds. 
Old-age, sun/ivors, and 
disability insurance. 

Hospital and 

supplementary medical 

insurance. 
Unemployment insurance . 

State 



Calendar 
year 
1982 

(Billions 
of 

dollars) 



Railroad employees. 



Federal employees 

Special unemployment 
benefits. 
Federal employee 
retirement. 
Civilian 



781.2 
272.7 

193.8 

78.9 
9.2 



15.2 
.2 
.6 
.9 

4.2 

1.9 
.6 
.8 
.6 

2.2 

2.1 
.8 
.3 

6.0 
.1 
.5 
.5 

1.1 
.9 
.1 
.4 
.2 

1.1 
.5 
.6 





5.8 



63.5 



324.1 

316.3 
273.6 

153.7 



50.8 



25.2 
23.4 



.3 
1.1 

35.2 

19.9 



Procedure used to prepare 
seasonally adjusted estimates 



See table 11-7 for sources of 
estimates. 



Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
NSA = SA 
Additive X-1 1 
Additive X-1 1 

NSA = SA 
NSA = SA 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
NSA = SA 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
NSA = SA 
Multiplicative X-1 1 , 



Interpolated using flow of 
funds holdings as indicator. 

Multiplicative X-1 1 except for 
compensation. 



Multiplicative X-11 



Interpolated without indicator 
and extrapolated 
judgmentally. 

Multiplicative X-11 for regular 
and reimbursable benefits; 
NSA = SA for extended 
benefits. 

Multiplicative X-11 

Multiplicative X-11 

NSA = SA 



Multiplicative X-1 1 for civil 
service retirement and NSA 
= SA for all other. 



First July revision: Quarterly 
and calendar year estimates ' 



See table 11-7 for sources of 
estimates. 



Cun-ent quarterly and, when 
applicable, monthly estimates 



See table 11-7 for sources of 
estimates. 



For each commodity, the following sources are used: 

ASCS for information about quantities and trans- 
action prices for CCC activities 
NASS for nondairy market price information 
AMS for dairy market price information 



MTS outlays and fiscal year 
analysis relationships. 

FDIC and Federal Reserve 
Board data on bank income 
and on deposits. 

MTS outlays and fiscal year 
analysis relationships 
except for compensation. 



SSA monthly payments. 



MTS outlays and fiscal year 
analysis relationships. 



UIS annual benefits, prorated 
usinq gross UIS monthly 
regular and extended 
benefits. 

AfTS outlays 

UIS benefits 

UIS 



MTS outlays for civil service 
and foreign service 
retirement; aqency or 
budget data for all other. 



MTS outlays and fiscal year 

analysis relationships. 
Extrapolated judgmentally. 



MTS outlays and fiscal year 
analysis relationships 
except for compensation. 



Extrapolated judgmentally; 

SSA monthly payments, 

when available. 
Extrapolated judgmentally, 

guided by budget 

projection. 

Extrapolated judgmentally, 
guided by cash withdrawals 
and unemployment rates. 

Extrapolated judgmentally; 

MTS outlays when 

available. 
Extrapolated judgmentally. 
No benefits are currently paid. 



Extrapolated judgmentally; 
civil service and foreign 
service from MTS when 
available. 



Government Transactions. 



J^ovemher 1988 



31 



Table 11-5. — Federal Government Expenditures: Sources of Estimates — Continued 



Line 



Category 



Calendar 

year 

1982 

(Billions 

of 
dollars) 



Procedure used to prepare 
seasonally adjusted estimates 



First July revision; Quarterly 
and calendar year estimates ' 



Current quarterly and, when 
applicable, monthly estimates 



47 
48 
49 
50 
51 



52 
53 



54 



55 



56 
57 



58 



59 
60 



61 
62 
63 

64 

65 

66 
67 
68 
69 
70 
71 
72 
73 
74 
75 



Military. 



Railroad retirement . 



Veterans life insurance . 



Workers' compensation 



Military medical 
insurance '. 

Veterans benefits 

Pension and disability . 



Readjustment. 



Food stamp benefits. 



Black lung benefits 

Supplemental security 
income. 

Earned income credit .. 



Other 

Aid to students ■* . 



Payments to nonprofit 
institutions. 

Military medical 
insurance ^ 

All other 5 



To foreigners. 



Grants-in-aid to State and 
local governments. 

Highways 

Medicaid 

Public assistance 

Education 

Urban renewal 

Revenue sharing 

Public service jobs 

Community development 

Urban mass transit 

Water and sewage treatment 



15.4 



5.8 



1.4 



14.9 
13.3 



1.6 



9.9 



1.7 
6.9 



1.2 



8.2 

4.5 



2.6 



7.8 

83.9 

7.7 

17.9 

2.6 

7.7 

.1 
4.6 

.1 
4.0 
2.6 
3.4 



Multiplicative X-11 



NSA = SA. 



Multiplicative X-11 in most 
years; NSA = SA in others. 

Interpolated without indicator 

and extrapolated 

judgmen tally. 
NSA = SA 



Multiplicative X-11 



Interpolated using judgmental 
indicator and extrapolated 
judgmen tally. 

Multiplicative X-11 

NSA = SA 

NSA = SA 

Calendar year divided by 12 .. 
NSA = SA 



Interpolated without indicator 

and extrapolated 

judgmentally. 
NSA = SA 



NSA = SA for most programs; 
Alaskan native claims 
interpolated without 
indicator. 

NSA = SA for most programs; 
calendar year divided by 4 
for contributions to 
international organizations. 



Multiplicative X-11 

NSA = SA 

NSA = SA 

Multiplicative X-11 
Multiplicative X-11 

NSA = SA 

NSA = SA 

Multiplicative X-11 
Multiplicative X-11 
Multiplicative X-11 



wrs outlays 

Mrs outlays 

VA reports 

ESA reports 

DOD reports 

MTS outlays and VA reports 

MTS outlays and VA reports 
FNS reports 

SSA and ESA reports 

SSA reports 

MTS outlays 



MTS outlays and fiscal year 
analysis relationships. 

MTS outlays and fiscal year 
analysis relationships. 



DOD reports. 



MTS outlays and fiscal year 
analysis relationships. 



BPA data. 



MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 



Extrapolated judgmentally; 

MTS outlays when 

available. 
Extrapolated judgmentally; 

MTS outlays when 

available. 
Extrapolated judgmentally; 

payments data when 

available. 
Extrapolated judgmentally, 

guided by budget 

projection. 
Extrapolated judgmentally, 

guided by budget 

projection. 

Extrapolated judgmentally, 

guided by budget 

projection; M7i outlays 

when available. 
Extrapolated judgmentally, 

guided by budget 

projection. 

Extrapolated judgmentally, 

guided by budget 

projections; FNS benefits 

data when available. 
SSA and ESA benefits. 
Extrapolated judgmentally; 

SSA benefits data when 

available. 
Extrapolated judgmentally, 

guided by budget 

projection. 



VA 



Extrapolated 
guided by 
projection. 

Extrapolated 
guided by 
projection. 

Extrapolated 
guided by 
projection. 

Extrapolated 
guided by 
projection. 



judgmentally, 
budget 

judgmentally, 
budget 

judgmentally, 
budget 

judgmentally, 
budget 



BPA projection; BPA data 
when available. 



/WrS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 
MTS outlays and fiscal year 

analysis relationships. 



32 Government Transactions. 



J<Jovemher 1938 



Table 11-5.— Federal Government Expenditures: Sources of Estimates — Continued 



Line 



Category 



Calendar 

year 

1982 

(Billions 

of 
dollars) 



Procedure used to prepare 
seasonally adjusted estimates 



First July revision: Quarterly 
and calendar year estimates ' 



Current quarterly and, when 
applicable, monthly estimates 



76 
77 
78 

79 

80 
81 

82 

83 

84 
85 

86 
87 

88 

89 
90 



91 
92 



93 
94 

95 
96 
97 



98 
99 

100 



101 
102 



103 
104 

105 



Food and nutrition. 

Health care 

Other' 



Net interest paid 

Interest paid 

To persons and business. 



To foreigners , 



Less: Interest received by 
government. 

From persons and business. 
Monetary 



Imputed financial services 



From foreigners . 



Subsidies less current surplus 
of government enterprises.. 

Subsidies 

Agricultural 

Housing 

HUD, "Section 8" program 

HUD, other low-rent public 
housing. 

HUD, rent suppL, 

homeownership, and 

rental housing 

assistance. 
HUD, other housing 

programs. 

Farmers Home Admin., 

interest supplement 

programs. 
Farmers Home Admin., 

other rural housing 

programs. 

Maritime 

Maritime construction 

Maritime operating 

Railroad 

Amtrak 

Other 

Air carriers 

Other' 



4.3 

2.9 

18.0 

84.6 

101.1 
82.9 

18.3 

16.6 

13.0 
12.5 



3.6 



16.0 

15.0 
2.7 



9.8 
4.1 



3.0 
1.2 

.1 
1.5 




.1 
.1 

1.1 



Multiplicative X-11 , 
Multiplicative X-11 , 



Multiplicative X-11 and 
interpolated without 
indicator. 



Multiplicative X-11 



NSA = SA. 



NSA = SA. 



Interpolated using flow of 
funds holdings as indicator. 

Multiplicative X-11, NSA = SA, 
and interpolated without 
indicator. 



NSA = SA. 



Interpolated without indicator 

and extrapolated 

judgmentally. 
Interpolated without indicator 

and extrapolated 

judgmentally. 
Interpolated without indicator 

and extrapolated 

judgmentally. 

Interpolated without indicator 

and extrapolated 

judgmentally. 
Interpolated without indicator 

and extrapolated 

judgmentally. 
Interpolated without indicator 

and extrapolated 

judgmentally. 



Multiplicative X-11 , 
NSA = SA 



Interpolated without indicator 

and extrapolated 

judgmentally. 
NSA = SA 



NSA = SA. 



MTS outlays and fiscal year 
analysis relationships. 

MTS outlays and fiscal year 
analysis relationships. 

MTS outlays and fiscal year 
analysis relationships; a few 
are fiscal year outlays 
divided by 4. 



Fiscal year estimates 
interpolated using MTS 
interest. 

BPAdata 



Fiscal year estimate 

interpolated without 

indicator. 
FDIC and Federal Reserve 

Board data on bank income 

and on deposits. 
BPAdata 



Interpolated without indicator 
and extrapolated 
judgmentally. 



ASCS payments data for 
CCC; Mrs outlays and 
fiscal year relationships for 
others. 

MTS outlays and fiscal year 
analysis relationships. 

MTS outlays and fiscal year 
analysis relationships. 

MTS outlays and fiscal year 
analysis relationships. 



MTS outlays and fiscal year 
analysis relationships. 

Budget data, interpolated 
without indicator. 

MTS outlays and fiscal year 
analysis relationships. 



MTS outlays and fiscal year 
analysis relationships. 

MTS outlays and fiscal year 
analysis relationships. 



MTS outlays and fiscal year 
analysis relationships. 

MTS outlays and fiscal year 
analysis relationships. 

Budget data, interpolated 
without indicator. 

MTS outlays and fiscal year 
analysis relationships. 



MTS outlays and fiscal year 
analysis relationships. 

MTS outlays and fiscal year 
analysis relationships. 

MTS outlays and fiscal year 
analysis relationships; a few 
are fiscal year outlays 
divided by 4. 



Fiscal year estimates 
extrapolated using MTS 
interest. 

BPA projection; BPA data 
when available. 



Extrapolated judgmentally, 

guided by budget 

projection. 
Extrapolated judgmentally. 



BPA projection; BPA data 
when available. 



ASCS payments data for 
CCC; extrapolated 
judgmentally for all others. 



Extrapolated judgmentally, 

guided by budget 

projection. 
Extrapolated judgmentally, 

guided by budget 

projection. 
Extrapolated judgmentally, 

guided by budget 

projection. 

Extrapolated judgmentally, 

guided by budget 

projection. 
Extrapolated judgmentally, 

guided by budget 

projection. 
Extrapolated judgmentally, 

guided by budget 

projection. 

No subsidies are currently 

paid. 
Extrapolated judgmentally; 

MTS outlays when 

available. 

Extrapolated judgmentally, 

guided by budget 

projection. 
No subsidies are currently 

paid. 
Extrapolated judgmentally, 

guided by budget 

projection. 

Extrapolated judgmentally, 
guided by budget 
projection. 



Government Transactions. 



.November 1988 



33 



Table 11-5. — Federal Government Expenditures: Sources of Estimates — Continued 



Category 



Calendar 

year 

1982 

(Billions 

of 
dollars) 



Procedure used to prepare 
seasonally adjusted estimates 



First July revision: Quarterly 
and calendar year estimates ' 



Current quarterly and, when 
applicable, monthly estimates 



Less: Current surplus of 
government enterprises. 

Postal Service 



Commodity Credit 
Corporation. 
Regular 

Valuation adjustment 

Acquisitions 

Barley 

Butter 

Cheese 

Corn 

Upland cotton 

Grain sorghum... 

Dried milk 

Rough rice 

Soybeans 

Wheat 

All other crops.... 

Less: Dispositions . 

Barley 

Butter 

Cheese 

Corn 

Upland cotton 

Grain sorghum... 

Dried milk 

Rough rice 

Soybeans 

~ Wheat 

All other crops.... 
Other 



Federal Housing 
Administration. 



Tennessee Valley 
Authority. 

Another' 



Less: Wage accruals less 
disbursements. 

Surplus or deficit (-), 
national income and 
product accounts. 



Social insurance funds . 
Other 



-.9 



^.5 



-2.1 



-1.4 
-.9 



-.1 
-.7 

.1 
-.1 



.2 
-.3 


.4 





.1 




.2 

.1 

3.1 



1.2 
1.4 

-145.9 



-30.8 
-115.0 



Interpolated without indicator 
and extrapolated 
judgmentally. 



Interpolated without indicator 
and extrapolated 
judgmentally. 



Additive X-1 1 
NSA = SA 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
NSA = SA 
NSA = SA 
Additive X-1 1 
Additive X-1 1 
Additive X-1 1 
NSA = SA 

NSA = SA 

NSA = SA 

Additive X-1 1 

Additive X-1 1 

Additive X-1 1 

NSA = SA 

NSA = SA 

Additive X-1 1 

Additive X-1 1 

NSA = SA 

NSA = SA 

Interpolated without indicator 

and extrapolated 

judgmentally. 



NSA = SA. 



Postal Service reports . 



ASCS 



Extrapolated judgmentally, 
guided by budget 
projection. 



Extrapolated judgmentally, 
guided by budget 
projection. 



For each commodity, the following sources are used: 

ASCS for information about quantities and trans- 
action prices for CCC activities 
NASS for nondairy market price information 
AMS for dairy market price information 



Federal Housing 

Administration reports, 

interpolated without 

indicator. 
Tennessee Valley Authority 

reports, interpolated without 

indicator. 
Budget data, interpolated 

without indicator. 

Postal Service data 



Extrapolated judgmentally, 
guided by budget 
projection. 



Postal Service data. 



1. Except as noted, the estimates for later revisions have the same sources. 

2. The sources for compensation of errployees are described in table 11-7. 

3. Benefits to dependents of active duty personnel are treated as social insurance benefits; 
those to retired military personnel and their dependents are included in other transfer payments. 

4. Includes higher education student assistance (Pell grants) and interest payments on guaran- 
teed student loans. 

5. Includes payments to native Americans, payments to former employees of railroads com- 
bined to form Conrail. special benefits for workers rendered unemployed by the expansion of 
Redwood National Park, trade adjustment assistance, stipends to Job Corps trainees, and bene- 
fits for disabled tongshoremen and harbor workers. 

6. Includes grants for training and employment sen/ices. State administratbn of unenployment 
insurance, low income home energy assistance, Head Start and services for the aging, research 
and development funded by the Department of Energy, refugee assistance, assistance rendered 
by States to the SSA in determining eligibility for disability benefits, and payments to States under 
the Mineral Leasing Act. 

7. Includes mass transit, surface mining, and disaster subsidies. 

8. Includes Federal Deposit Insurance Corporation, Federal Savings and Loan Insurance Cor- 
poration, National Credit Union Administration Share Insurance Fund, Bonneville Power Adminis- 
tration, Southeastern Power Administration, Southwestern Power Administration, and Pension 
Benefit Guaranty Corporation. 



AMS Agricultural Marketing Service. U.S. Department of Agriculture. 

ASCS Agricultural Stabilization and Conservation Service, U.S. Department of 

Agriculture. 

BPA Balance of Payments Accounts. 

CCC Commodity Credit Corporation. 

DOD U.S. Department of Defense. 

ERS Economic Research Sen/ice. U.S. Department of Agriculture. 

ESA Employment Security Administration, U.S. Department of Leibor. 

FDIC Federal Deposit Insurance Corporation. 

FNS Food and Nutrition Service, U.S. Department o< Agriculture. 

HUD U.S. Department of Housing and Urban Development. 

MTS Monthly Treasury Statement. 

NASS National Agricultural Statistics Service, U.S. Department of Agriculture. 

NSA Not seasonally adjusted. 

SA Seasonally adjusted. 

SSA Social Security Administration. 

UIS Unemployment Insurance Service, U.S. Department of Labor. 

VA Veterans' Administration. 

X-11 Census Bureau seasonal adjustment procedure. 



34 Government Transactions. 



J^ovember 1988 



Table 11-6. — Relation of National Defense Purchases in the National 
Income and Product Accounts to National Defense Outlays in the 
Budget, Calendar Year 1982 

[Billions of dollars] 



National defense outlays in the unified budget. 



Department of Defense, military... 
Atomic energy defense activities.. 
Defense-related activities ' 



Plus: Military assistance purcfiases.. 



tess; Grants-in-aid to State and local governments. 

Timing difference 

Other adjustments 



Equals: National defense purchases, NIPA's. 



193.6 

188.7 

4.5 

.4 



1.1 
-.3 
-.5 

193.8 



1. Consists of the emergency management planning and assistance function of the Federal 
Emergency Management Agency, property resources activities of the General Services Adminis- 
tration, the Selective Service System, the Intelligence Community Staff, and a payment to the 
retirement fund of the Central Intelligence Agency. 



ment of Defense, defense-related atomic energy activi- 
ties of the Department of Energy, and defense-related 
activities of other agencies — plus those for military 
assistance. The nondefense category consists of the 
purchases of goods and services for all the remaining 
activities of the Federal Government. Purchases for 
each category are also estimated by type of purchase: 
Durable goods, nondurable goods, compensation of em- 
ployees, services other than compensation, and struc- 
tures. 

National defense purchases 

Total national defense purchases, as indicated ear- 
lier, are derived from budget outlays as part of the 
fiscal year analysis. Outlays are adjusted for timing, 
coverage, and other differences, as shown in table II- 
6, to put them on a basis consistent with NIPA pur- 
chases. 

Within the budget-based control total, estimates of 
national defense purchases by type, except compen- 
sation of employees, are prepared using one of three 
methods and summed to the detail shown in the first 
column of table II-7 and published in NIPA table 3.9. 
(Appendix II-A provides definitions of the components 
at this level of detail.)^ When data are available, 
the estimates are prepared as the product of a de- 
livered quantity and a price paid. This method, re- 
ferred to in table II-7 as the "directly priced" method, 
is preferred because it allows the development of corre- 
sponding constant-dollar estimates by using the deliv- 
ered quantity — the same as used with ciurent-dollar 
estimates — with the base-year price. The method is 
described for aircraft, the first component listed. Data 
to implement the method for a variety of goods and 
for some services are available from the Department 
of Defense (DOD). Two sources of price and quantity 
data are widely used: 

• Contract Control Documentation Reports 
(CCDR's): Data on prices paid by DOD for compo- 



3. Prior to 1972, a breakdown of national defense purchases by type was 
not available. Many of the source data for the breakdown were identified in 
a major project undertaken with DOD [44]. 



nents of major weapons systems are available in 
contract control documentation reports [7]. For 
example, "Contract Cost Data Reports" (CCDR, 
DD Form 1921-1) [7A] provides current prices for 
items listed in a contract. These reports are pre- 
pared monthly and are usually available by the 
final quarterly estimate. 

• Production Control Reports (PCR's): Data on the 
quantities of major components accepted by DOD 
are available for weapons systems in a number 
of production control reports [18]. For example, 
the "Monthly Aircraft Acceptance Report" [18G] 
provides quantity data for aircraft accepted by 
the Navy. The reports are prepared monthly and 
are generally available by the final quarterly es- 
timate. 

When data on prices and quantities are not avail- 
able, current-dollar estimates of purchases of most 
components are derived from DOD financial reports 
(see below), using what is referred to in table II-7 as 
the "ratio" method, and from budget outlays [77, 9K], 
using what is referred to as the "directly estimated" 
method. The ratio method is described for aircraft, and 
the directly estimated method is described for ships. 
Two sets of the DOD reports are widely used in imple- 
menting these methods: 

• Contract Awards (CA): Data on contract awards 
by four-digit Federal Supply Class are available 
in several reports [6]. For example, Department 
of Defense Prime Contract Awards [6A] contains 
data on type-of-service purchases for some service 
subcategories, such as education services, within 
the personnel support category. It is published 
on a fiscal year basis and is generally available 
by the first July revision following the end of the 
fiscal year. 

• Financial Reports (FR's): Detailed data on dis- 
bursements (and in some cases, obligations) are 
available as part of the DOD financial reports se- 
ries [9]. The disbursements data are reported 
monthly by each department of DOD in (DD 
COMP (M) 1002)— for example, by the Air Force 
in "Appropriation Status by Fiscal Year Program 
and Subaccounts" [9A] — and are generally avail- 
able by the final quarterly estimate. 

Most estimates of purchases by type are developed 
quarterly; quarterly not seasonally adjusted data are 
summed to obtain calendar year estimates. For a few 
types of purchases, estimates are developed for fiscal 
years and the quarters are interpolated without an 
indicator. The second column of table II-7 indicates 
which of the three general methods is used. The third 
column shows the 1982 value at a summary level of 
detail for the methods of estimation; the estimates are 
prepared at a much greater level of detail. The fourth 
column shows the procedure used to prepare the sea- 
sonally adjusted estimates. The fifth column describes 



Government Transactions. 



J<!ovemher 1988 



35 



the source data with which these methods are imple- 
mented for the first July revision, and the last three 
columns describe the source data for current quarterly 
estimates at the three stages of the estimating cycle. 

Aircraft. — Most purchases of aircraft are directly 
priced; the others are derived using the ratio method. 
The difference between the estimate of purchases de- 
rived using the two methods and budget outlays for 
aircraft is the timing adjustment. 

Directly priced purchases. — ^An aircraft system, 
such as the F-15, is usually purchased by DOD as 
components. The components — such as engines, air- 
frame, guns, and various electronic subsystems — 
are supplied as government-furnished equipment to 
the airframe contractor who performs the final in- 
tegration and assembly. Component estimates are 
obtained using the quantity delivered to DOD in a 
quarter as the quantity and the price paid by DOD 
as the price. The estimates for each component, in- 
cluding integration and assembly, are summed. For 
most components of major weapons systems, data on 
quantities delivered to DOD are available in PCR's 
[18A, B, C, F, G], and data on prices paid by DOD 
are available in CCDR's [7]. Quarterly not season- 
ally adjusted data are used as the seasonally ad- 
justed estimates. Quarterly estimates are summed 
to calendar year estimates. 

For the advance quarterly estimate, quantities de- 
livered and prices paid are based largely on sched- 
uled deliveries and prices from unpublished data un- 
derlying the budget [4B-2, -5, -15]. Data from PCR's 
and CCDR's are incorporated in the estimates as 
they become available. If PCR's or CCDR's are not 
available for a given estimate, the appropriate of- 
fice in DOD is contacted to determine if there are 
any known changes from the scheduled deliveries 
or prices. 

Ratio purchases. — Delivery schedules or prices are 
not available for some aircraft components, parts, 
equipment, and associated items. Estimates of 
current-dollar purchases for these items are derived 
indirectly. An indirect pricing factor (IPF) — the ra- 
tio of funds that are not directly priced to total funds 
available to be spent for a major group — is derived 
from FR's [9 A, F, L, Q] for major groups of aircraft 
systems, such as for Air Force combat aircraft. The 
IPF is applied to quarterly disbursements from FR's 
[9A, B, F, G, Q, T] to derive purchases. Quarterly 
not seasonally adjusted data are used as the sea- 
sonally adjusted estimates. Quarterly estimates are 
summed to calendar year estimates. 

For the advance quarterly estimate, the IPF is 
judgmental and is applied to a quarterly estimate 
based on 2 months of outlays from the MTS [77]; for 
the final estimate, the IPF is applied to quarterly 
disbursements from FR's. More refined estimates of 



the IPF are made as data on the directly priced pur- 
chases and total obligated funds become established. 

Missiles. — Purchases of missiles are derived using 
the directly priced method, v/ith quantity data from 
PCR's [18A, B, C, D] and price data from CCDR's [7], 
and the ratio method, with disbursements from FR's 
[9A, B, F, G, Q, T]. The sum of purchases derived us- 
ing the two methods is the estimate of missiles pur- 
chases for the quarter. Quarterly not seasonally ad- 
justed data are used as the seasonally adjusted esti- 
mates. Quarterly estimates are summed to calendar 
year estimates. The difference between the estimate of 
purchases and total outlays for missiles in the quarter 
is the timing adjustment. 

The current quarterly estimates of missiles are pre- 
pared in the same manner as aircraft, using — for 
the advance estimate — scheduled deliveries and prices 
from unpublished data underlying the budget [4B-3, 
-6, -12, -13]. 

Ships. — Purchases of ships are derived using the di- 
rectly priced method, with quantity data from PCR's 
[18E] and price data from CCDR's [7]; the ratio 
method, with disbursements from FR's [9Q, T]; and a 
directly estimated method for private shipyards. (The 
directly estimated method is described in the next 
paragraph.) The quarterly estimates of directly priced 
purchases and of ratio purchases are seasonally ad- 
justed using the Census X-11 procedure. Quarterly 
estimates are summed to calendar year estimates. 
The sum of purchases derived using the directly es- 
timated purchases from private shipyards and the di- 
rectly priced and ratio methods is the estimate of ship 
purchases for the quarter. The difference between this 
sum and total outlays for ship construction and con- 
version in the quarter is the timing adjustment. 

The current quarterly estimates of ships other than 
those that are directly estimated are prepared in 
the same manner as aircraft, using — ^for the advance 
estimate — scheduled deliveries and prices from un- 
published data underlying the budget [4B-16]. 

The source data include ships that are sold to foreign 
countries under the foreign military sales program. 
When the ship is exported, the value is subtracted — 
based on balance of payments accounts data [46] — to 
derive net purchases and to offset the inclusion of the 
ship in exports so that GNP is not affected. (The ship 
is included in defense purchases and in GNP as it is 
constructed.) 

Directly estimated purchases. — Navy ship con- 
struction and conversion performed in private ship- 
yards is included in the NIPA purchases on a work- 
put-in-place basis rather than a delivery basis. This 
work consists of construction of the hull and super- 
structure and the assembly and integration of com- 
ponents and subsystems provided to the shipyard as 
government-furnished equipment. Disbursements 
by the Navy correspond closely to work done (that 
is, purchases) in a given quarter. Quarterly data on 



36 Government Transactions. 



JSlovemher 1988 



Table 11-7.— National Defense Purchases: Sources of Estimates 



Category 



Method 



Calendar 

year 1982 

(Billions of 

dollars) 



Procedure 
used to 
prepare 

seasonally 
adjusted 

estimates 



July revision 



Current quarterly estimates 



Advance 



Preliminary 



Final 



National 
defense. 



Durable goods. 

Aircraft 



Missiles 



Ships . 



Vehicles. 



Electronic 
equipment. 



Other equipment , 



Other durable 
goods. 



Sum of detail.. 

Sum of detail.. 

Directly priced 
Quantities... 

Prices 

Ratio 

Directly priced 
Quantities... 

Prices 

Ratio 

Directly priced 
Quantities... 

Prices 

Ratio 



Directly 
estimated. 



Directly priced 
Quantities... 

Prices 

Ratio 



Directly 
estimated. 



Directly 
estimated. 



Directly 
estimated. 



193.8 



49.2 



7.4 



9.4 



2.0 



3.7 



2.8 



3.0 



1.6 



1.3 



3.1 



5.8 



8.9 



NSA=SA. 



NSA=SA. 



NSA=SA. 



NSA=SA. 



Multiplicative 
X-11. 



Multiplicative 
X-11. 



NSA=SA. 



NSA=SA. 



NSA=SA. 



NSA=SA. 



NSA=SA. 



NSA=SA. 



PCR's.... 
CCDR's. 



FR quarteriy 
disburse- 
ments. 



PCR's.... 
CCDR's. 



FR quarteriy 
disburse- 
ments. 



PCR's. 



CCDR's. 



FR quarteriy 
disburse- 
ments. 

FR quarterly 
disburse- 
ments, BPA 
data. 



PCR's. 



CCDR's. 



FR quarteriy 
disburse- 
ments. 



FR quarteriy 
disburse- 
ments. 



FR quarteriy 
disburse- 
ments. 

FR quarteriy 
disburse- 
ments, CA, 
and BPA 
data. 



Budget or, when 

available, 

PCR's. 
Budget or, when 

available, 

CCDR's. 
Extrapolated 

using MTS 

outlays as 

indicator. 



Budget or, when 

available, 

PCR's. 
Budget or, when 

available, 

CCDR's. 
Extrapolated 

using MTS 

outlays as 

indicator. 



Budget or, when 

available, 

PCR's. 
Budget or, when 

available, 

CCDR's. 
Extrapolated 

using MTS 

outlays as 

indicator. 
Extrapolated 

using MTS 

outlays as 

indicator, BPA 

data. 



Budget data or, 

when available, 

PCR's. 
Budget data or, 

when available, 

CCDR's. 
Extrapolated 

using MTS 

outlays as 

indicator. 

Extrapolated 
using MTS 
outlays as 
indicator. 

Extrapolated 
using MTS 
outlays as 
indicator. 

Extrapolated 
judgmentally. 



More PCR's.... 
More CCDR's . 



Extrapolated 
using MTS 
outlays as 
indicator. 



More PCR's.... 
More CCDR's. 



Extrapolated 
using MTS 
outlays as 
indicator. 



More PCR's. 



More CCDR's. 



Extrapolated 

using MTS 

outlays as 

indicator. 
Extrapolated 

using MTS 

outlays as 

indicator, BPA 

data. 



More PCR's. 



More CCDR's. 



Extrapolated 
using MTS 
outlays as 
indicator. 

Extrapolated 
using MTS 
outlays as 
indicator. 

Extrapolated 
using MTS 
outlays as 
indicator. 

Extrapolated 
judgmentally. 



Many PCR's. 
Many CCDR's. 



FR quarterly 
disbursements. 



Many PCR's. 



Many CCDR's. 



FR quarterly 
disbursements. 



Many PCR's. 
Many CCDR's. 



FR quarteriy 
disbursements. 



FR quarterly 
disbursements, 
BPA data. 



Many PCR's. 
Many CCDR's. 



FR quarteriy 
disbursements. 



FR quarteriy 
disbursements. 



FR quarteriy , 

disbursements. , 



FR quarteriy | 

disbursements, , 

extrapolated j 

judgmentally, i 

and, when ' 

available, BPA ' 

data. j 



See footnotes at end of table. 



Government Transactions. 



^November 1988 



37 



Table 11-7.— National Defense Purchases: Sources of Estimates — Continued 







Calendar 


Procedure 
used to 




Current quarteriy estimates 














Category 


Method 


year 1982 

(Billions of 

dollars) 


prepare 

seasonally 

adjusted 

estimates 


July revision ' 


Advance 


Preliminary 


Final 


Nondurable goods... 


Sum of detail.... 


13.6 












Petroleum 


Directly priced... 


8.1 


NSA=SA 


PPR'S 


Extrapolated 
judgmentally 


PPR'S 


PPR'S. 


products. 






















or, when 
















available. 
















PPR'S. 








Directly 


1.1 


NSA=SA 


FR quarteriy 
disburse- 


Extrapolated 
judgmentally. 


Extrapolated 
judgmentally. 


FR quarterly 
disbursements. 




estimated. 














ments. 








Ammunition 


Directly priced: 
Quantities 


.3 


NSA=SA 
















Budget data 


Budget data or. 


Budget data 


Budget data. 












when available. 














PCR's. 








Prices 






CCDR's 


Budget data or, 
when available, 


More CCDR's 


Many CCDR's. 
























CCDRs. 








Directly 


2.0 


NSA=SA 


FR quarteriy 
disburse- 


Extrapolated 
using MTS 


Extrapolated 
using MTS 


FR quarterly 
disbursements. 




estimated. 














ments. 


outlays as 
indicator. 


outlays as 
indicator. 




Other nondurable 


Directly 


2.1 


Multiplicative 


FR quarterly 


Extrapolated 


Extrapolated 


FR quarterly 


goods. 


estimated. 




X-11. 


disburse- 
ments, CA, 
and BPA 


judgmentally. 


judgmentally. 


disbursements, 
extrapolated 
judgmentally, 
and, when 










data. 




















available, BPA 
















data. 


Services 


Sum of detail 

Sum of detail 


127.1 
56.6 












Military 




compensation. 
















Wages and 




39.1 


Interpolated 


Budget wages 


Extrapolated 


Extrapolated 


Extrapolated 


salaries. 






and 


and salaries. 


using 
employment as 


using 
employment as 


using 
employment as 








extrapolated 










using 
employment 




indicator and 


indicator and 


indicator and 










judgment. 


judgment. 


judgment. 








as indicator. 










Supplements: 
Employer 


















17.5 


See table 11-4 


See table 11-4 


See table 11-4 for 


See table 11-4 for 


See table 11-4 for 


contribu- 






for sources 


for sources 


sources of 


sources of 


sources of 


tions for 






of estimates. 


of estimates. 


estimates. 


estimates.. 


estimates. 


social 
















insurance. 
















Civilian 


Sum of detail 


27.4 












compensation. 
















Wages and 




22.7 


Interpolated 


0PM wages 
and salaries. 


Extrapolated 


Extrapolated 


Extrapolated 


salaries. 






without 


judgmentally. 


judgmentally. 


judgmentally. 








indicator and 
















extrapolated 
















judgmentally. 










Supplements: 
Employer 


















3.5 


See table 11-4 


See table 11-4 


See table 11-4 for 


See table 11-4 for 


See table 11-4 for 


contribu- 






for sources 


for sources 


sources of 


sources of 


sources of 


tions for 






of estimates. 


of estimates. 


estimates. 


estimates. 


estimates. 


social 
















insurance. 
















Other labor 




1.1 


Interpolated 


OPM 


Interpolated 


Interpolated 


Interpolated 


income. 






without 


employee 


without 


without 


without 








indicator and 


benefits. 


indicator and 


indicator and 


indicator and 








extrapolated 




extrapolated 


extrapolated 


extrapolated 








judgmentally. 




judgmentally. 


judgmentally. 


judgmentally. 



See footnotes at end of table. 



38 Government Transactions. 



JsJovember 1988 



Table 11-7.— National Defense Purchases: Sources of Estimates— Continued 







Calendar 

year 1982 

(Billions of 

dollars) 


Procedure 
used to 
prepare 

seasonally 
adjusted 




Current quarterly estimates 


Category 


Method 


July revision ' 


Advance 


Preliminary 


Final 








estimates 










Services — 
















Continued 
















Other services 


Sum of detail 


43.2 












Contractual 


Directly 


16.3 


Multiplicative 


MTS outlays 
adjusted by 
NSF data. 


Extrapolated 


MTS outlays 
adjusted by 
NSF data. 


MTS outlays 
adjustea by 
NSF data. 


research and 


estimated. 




X-11. 


using MTS 


development. 








outlays as 












indicator. 






Installation 


Directly 


12.0 


Multiplicative 


FR quarterly 


Extrapolated 


Extrapolated 


Extrapolated 


support. 


estimated. 




X-1 1 and 

interpolated 

without 

indicator and 

extrapolated 

judgmentally. 


disburse- 
ments and 
CA. 


judgmentally. 


judgmentally. 


judgmentally 
and FR 
quarterly 
disbursements. 


Weapons 


Directly 


5.5 


Multiplicative 


FR quarterly 


Extrapolated 


Extrapolated 


Extrapolated 


support. 


estimated. 




X-1 1 and 

interpolated 

without 


disburse- 
ments and 
CA. 


judgmentally. 


judgmentally. 


judgmentally 
and FR 
Quarterly 
disbursements. 








indicator and 














extrapolated 
















judgmentally. 










Personnel 


Directly 


3.6 


Multiplicative 


CA and BPA 


Extrapolated 


Extrapolated 


Extrapolated 


support. 


estimated. 




X-1 1 and 

interpolated 

without 

indicator and 

extrapolated 

judgmentally. 


data. 


judgmentally. 


judgmentally. 


judgmentally 
and, when 
available, BPA 
data. 


Transportation 


Directly 


3.2 


Multiplicative 


FR quarterly 


Extrapolated 


Extrapolated 


FR Quarterly 
ob igations and 


of materiel. 


estimated. 




X-11. 


obligations 


judgmentally. 


judgmentally 










and various 




or, when 


various DOD 










DOD reports 




available, FR 


reports as 










as available. 




quarterly 
obligations. 


available. 


Travel of 


Directly 


2.6 


NSA=SA 


FR Quarterly 
ob igations 


Extrapolated 
judgmentally. 


Extrapolated 
judgmentally 


FR quarterly 
obligations and 


persons. 


estimated. 














and various 




or, when 


various DOD 










DOD reports 




available, FR 


reports as 










as available. 




quarterly 
obligations. 


available. 


Other 


Directly 


(*) 


NSA=SA 


MTS outlays 
and BPA 


Extrapolated 
using MTS 


MTS outlays and 
extrapolated 


MTS outlays and 
extrapolated 




estimated. 


\ / 












data. 


outlays as 
indicator. 


judgmentally. 


judgmentally 
or, when 
available, BPA 
data. 


Structures 


Sum of detail 

Directly pric«d... 


3.9 

.7 


NSA=SA 


CPR's 


Extrapolated 


More CPR's 




Military facilities 


Many CPR's. 












judgmentally 
















or, when 
















available, 
















CPR's. 








Directly 


1.6 


NSA=SA 


FR quarterly 


Extrapolated 


Extrapolated 


FR quarterly 




estimated. 






disburse- 
ments. 


using MTS 
outlays as 
indicator. 


using MTS 
outlays as 
indicator. 


disbursements. 


Other structures 


Directly 


1.6 


Multiplicative 


FR quarterly 


Extrapolated 


Extrapolated 


FR quarterly 




estimated. 




X-11. 


disburse- 


using MTS 


using MTS 


disbursements 










ments and 


outlays as 


outlays as 


and CCR. 










CCR. 


indicator and 
CCR. 


indicator and 
CCR. 





' Less than $0.05 billion. 

1. The estimates for later revisions have the same sources. 



BPA Balance of Payments Accounts. 

CA Contratrt awards. 

CCDR Contract control documentation report. 

CCR Current Coristrudion Reports. 



CPR Construction project report. 

FR Financial reports. 

MTS Monthly Treasury Statement. 

NSA Not seasonally adjusted. 

NSF National Science Foundation. 



0PM Office of Personnel Management. 

PCR Production control report. 

PPR Petroleum products report. 

SA Seasonally adjusted. 

X-11 Census Bureau seasonal adjustment prcx»cJure. 



Government Transactions. 



J^ovemher 1988 



39 



disbursements are available in PR's [9Q, T]. Quar- 
terly not seasonally adjusted data are used as the 
seasonally adjusted estimates. Quarterly estimates 
are summed to calendar year estimates. 

The advance quarterly estimate is an extrapola- 
tion using 2 months of MTS outlays as the indica- 
tor. FR disbursements data are used as they become 
available, generally by the final estimate. 

Vehicles. — Purchases of vehicles are derived using 
the directly priced method, with quantitj' data from 
PCR's [18C] and price data from CCDR's [7], and the 
ratio method, with disbursements from FR's [9A, B, 
F, G, Q, T]. The sum of purchases derived using the 
two pricing methods is the estimate of vehicles pur- 
chases for the quarter. Quarterly not seasonally ad- 
justed data are used as the seasonally adjusted esti- 
mates. Quarterly estimates are summed to calendar 
year estimates. The difference between the estimate of 
purchases and total outlays for vehicles in the quarter 
is the timing adjustment. 

The current quarterly estimates of vehicles are pre- 
pared in the same manner as aircraft, using — ^for 
the advance estimate — scheduled deliveries and prices 
from unpublished data underlying the budget [4B-4, 
-7, -8, -9, -10, -11]. 

Electronic equipment. — Purchases of electronic 
equipment, such as radio sets and radar systems that 
are not initially installed as components of a weapons 
system, are directly estimated. Quarterly data on dis- 
bursements are available in FR's [9A, B, F, G, L, O, 
Q, T]. Quarterly not seasonally adjusted data are used 
as the seasonally adjusted estimates. Quarterly esti- 
mates are summed to calendar year estimates. 

The advance quarterly estimate is an extrapolation 
using 2 months of MTS outlays as the indicator. FR 
disbursements data are used as they become available, 
generally by the final estimate. 

Other equipment. — Purchases of other equipment, 
such as portable pontoon bridges and other military- 
specific items that are not initially installed as com- 
ponents of a weapons system, are directly estimated. 
Quarterly data on disbursements are available in FR's 
[9A, B, F, G, L, 0, Q, T]. Quarterly not seasonally ad- 
justed data are used as the seasonally adjusted esti- 
mates. Quarterly estimates are summed to calendar 
year estimates. 

The advance quarterly estimate is an extrapolation 
using 2 months of MTS outlays as the indicator. FR 
disbursements data are used as they become available, 
generally by the final estimate. 

Other durable goods. — Purchases of other durable 
goods — such as pumps, hand tools, general purpose 
computers [6A] and goods for the foreign military 
assistance program that are not military-specific in 
nature — are directly estimated. Quarterly data on dis- 
bursements for most other durable goods are avail- 
able in FR's [9B C, D, G, H, I, M, N, 0, R, S, T]. 
Quarterly data for the foreign military assistance pro- 



gram are from BEA's balance of payments accounts 
[46]. Quarterly not seasonally adjusted data from both 
sources are used as the seasonally adjusted estimates. 
Quarterly estimates are summed to calendar year es- 
timates. 

The advance quarterly estimate is a judgmental ex- 
trapolation. FR disbursements and balance of pay- 
ments accounts data are used as they become avail- 
able, generally by the final estimate. 

Petroleum products. — Most purchases of petro- 
leum are directly priced using the number of gallons 
delivered and price paid per gallon from invoices sum- 
marized in monthly petroleum product reports (PPR's) 
[17]; the other purchases are directly estimated us- 
ing disbursements data from FR's [90]. The sum of 
purchases derived using the two methods is the es- 
timate of petroleum purchases for the quarter. For 
both methods, not seasonally adjusted data are used 
as the seasonally adjusted estimates. Quarterly esti- 
mates are summed to calendar year estimates. 

For the advance quarterly estimate of directly priced 
petroleum, quantities delivered and prices paid are 
judgmental extrapolations or, when available, based 
on PPR data. As the information becomes available, 
generally by the preliminary estimate, the quantity 
and price data are from the PPR's. For directly esti- 
mated petroleum, the advance estimate is a judgmen- 
tal extrapolation. As the data become available, gen- 
erally by the final estimate, estimates are based on FR 
disbiorsements data. 

Ammunition. — Purchases of ammvmition are de- 
rived using the directly priced method, with quan- 
tity data from unpublished data underlying the bud- 
get [4B-14] and price data from CCDR's [7], and the 
directly estimated method, with disbursements from 
FR's [9A, B, F, G, Q, T]. The sum of purchases derived 
using the two methods is the estimate of ammunition 
purchases for the quarter. For both methods, quar- 
terly not seasonally adjusted data are used as the sea- 
sonally adjusted estimates. Quarterly estimates are 
summed to calendar year estimates. 

The advance quarterly estimate of directly priced 
ammunition is based largely on scheduled deliveries 
and prices from supporting data to the budget [4B-14]. 
As they become available, CCDR data are used. The 
advance quarterly estimate of directly estimated am- 
munition is an extrapolation using 2 months of MTS 
outlays as the indicator. FR disbursements data are 
used as they become available, generally by the final 
estimate. 

Other nondurable goods. — Purchases of other 
nondurable goods — such as food, drugs, and clothing — 
are directly estimated. For all except printing and 
for the foreign military assistance program, quarterly 
data on disbursements are in FR's [9B, G, 0, TJ. 
Quarterly estimates are summed to calendar year es- 
timates. The quarterly estimates are seasonally ad- 
justed using the Census X-11 procedure. The advance 



40 Government Transactions. 



Jslovember 1988 



quarterly estimate is a judgmental extrapolation. FR 
disbui'sements data are used as they become available, 
generally by the final estimate. 

Printing purchases are based on annual CA data 
[6A], which are available by the first July revision. 
Purchases of other nondurable goods for the foreign 
military assistance program are from BEA's balance of 
payments accounts 46]. Quarterly seasonally adjusted 
estimates of printing and foreign military assistance 
purchases are interpolations without an indicator and, 
for the current estimates, judgmental extrapolations; 
the balance of payments accounts data are generally 
available by the final estimate. 

Military compensation. — Compensation for active 
duty military personnel and for reserve personnel is 
estimated as the sum of two components: Wages 
and salaries, and supplements to wages and salaries. 
Coast Guard compensation is estimated as part of mil- 
itary compensation and is then removed from national 
defense and added to nondefense. 

Wages and salaries. — Fiscal year estimates of 
wages and salaries for active duty and reserve per- 
sonnel are derived from budget data [4A-2, 4B-1, 
and 13B, C, D, F, G], generally by the first July revi- 
sion. Monthly estimates are intei*polations of the fis- 
cal year estimates using monthly not seasonally ad- 
justed data on the number of personnel [13E] as the 
indicator for active duty personnel and using judg- 
mental estimates of reserve wages and salaries as 
the indicator for reserve personnel. The estimates 
are then adjusted for pay raises. Monthly estimates 
are summed to quarterly and calendar year esti- 
mates. 

Cuirent monthly estimates of wages and salaries 
for active duty military personnel are extrapolations 
using the number of active duty military person- 
nel as the indicator. Current monthly estimates of 
wages and salaries for reserve personnel are judg- 
mental extrapolations. The estimates are then ad- 
justed for pay raises. 

Supplements to wages and salaries. — Supple- 
ments to military wages and salaries consist of the 
following employer contributions for social insur- 
ance: Old-age, survivors, hospital, and disability 
insurance; military retirement; veterans life insur- 
ance; workers' compensation; and military medical 
insurance for dependents of active duty military per- 
sonnel. A description of the methodology used to es- 
timate these employer contributions is discussed in 
the contributions for social insurance section of the 
receipts derivation. There are no other labor income 
items, such as health and life insurance, for military 
personnel. 

Civilian compensation. — Civilian compensation is 
estimated as the sum of two components: Wages and 
salaries, and supplements to wages and salaries. Esti- 
mates of these components are made for the total Fed- 
eral Government sector (excluding enterprises) and 



then allocated to national defense and nondefense pur- 
chases. 

Wages and salaries. — Calendar year estimates of 
civilian wages and salaries are primarily from Office 
of Personnel Management (0PM) data [13J], gener- 
ally by the first July revision. These are supple- 
mented by data from other agencies, such as the 
Department of Agriculture for county agricultural 
agents. Monthly seasonally adjusted estimates are 
interpolations without an indicator, with allowance 
for pay raises. Monthly estimates are summed to 
quarterly and calendar year estimates. 

Current monthly estimates of Federal civilian 
wages and salaries are judgmental extrapolations, 
adjusted for pay raises. Monthly estimates are 
summed to qusuterly estimates. Quarterly esti- 
mates are allocated to national defense and nonde- 
fense purchases using estimates of full- and part- 
time employment from 0PM [13H, I] as the indica- 
tor. 

Supplements to wages and salaries. — Supple- 
ments to civilian wages and salaries consist of em- 
ployer contributions for social insurance and other 
labor income. Employer contributions for social in- 
surance consist of the following: Old-age, survivors, 
disability, and hospital insurance, imemployment 
insurance, civilian employee retirement, and work- 
ers' compensation. A description of the methodol- 
ogy used to estimate these employer contributions 
is discussed in the contributions for social insurance 
section of the receipts derivation. Employer contri- 
butions are allocated to national defense and nonde- 
fense purchases in proportion to wages and salaries. 

The other labor income component of supple- 
ments consists of the following: Health insurance, 
life insurance, judicial fees, payments to prison in- 
mates, and the thrift plan. Annual estimates of 
other labor income are based largely on 0PM data. 
Monthly seasonally adjusted estimates are interpo- 
lations without an indicator and judgmental extrap- 
olations, with allowance for rate changes or other 
special factors. Civilian other labor income is allo- 
cated to national defense and nondefense purchases 
in direct proportion to wages and salaries. 

Contractual research and development. — 

Purchases of contractual research and development 
(R&D) are directly estimated. Monthly outlays are 
available in the MTS for DOD activities and for De- 
partment of Energy atomic energy activities [77]. The 
data are adjusted to exclude grants-in-aid for research, 
which are not considered to be government purchases. 
In addition, expenditures for R&D performed in-house 
by DOD are excluded based on data from the National 
Science Foundation (NSF) [15]. (R&D performed in- 
house by DOD appears as purchases of employee com- 
pensation, equipment, materials, etc. — the items DOD 
buys from the private sector.) The seasonally adjusted 



Government Transactions. 



J^ovember 1988 41 



estimates are prepared using the Census X-11 proce- 
dure. 

The advance quarterly estimate is an extrapolation 
using 2 months of MTS outlays as the indicator. For 
the final estimate, 3 months of MTS outlays are ad- 
justed by NSF data. 

Installation support. — Purchases of installation 
support services are estimated directly for 14 subcat- 
egories including electricity, natural gas, telephone, 
postage, housekeeping, and maintenance of real prop- 
erty and eqviipment. Quarterly expenditures for 
postage are available from the U.S. Postal Service [89] 
and for communications services from DOD's Commu- 
nication Services Industrial Fund [47, 48]. 

Fiscal year reports [27, 36, 52] are available from 
DOD on expenditures for electricity, natural gas, 
steam, and water and sewerage and from the General 
Services Administration on leases on property [85, 86]. 
Fiscal year CA data [6A] are available for property 
maintenance, equipment maintenance, housekeeping 
services, and other types of support services. Sea- 
sonally adjusted estimates for other installation sup- 
port purchases are interpolations without an indicator. 
Quarterly estimates are summed to the calendar year 
estimates. 

The advance quarterly estimate is a judgmental ex- 
trapolation. FR disbursements data [9L, 0] are used 
as they become available, generally by the final esti- 
mate. 

Weapons support. — Purchases of weapons support 
services are directly estimated for 11 subcategories of 
depot maintenance and services for new weapons sys- 
tems. Quarterly estimates of services for new weapons 
systems are derived as a percentage of disbursements 
for each major weapons system from FR data [9A, B, F, 
G, Q, T]. Quarterly estimates are summed to the calen- 
dar year estimates and are seasonally adjusted using 
the Census X-11 procedure. Fiscal year estimates for 
depot maintenance services are based on CA data [6A] 
and FR disbursements data [9D, I, R]. Quarterly sea- 
sonally adjusted estimates are interpolations without 
an indicator. 

The advance quarterly estimate is a judgmental ex- 
trapolation. FR disbursements data are used as they 
become available, generally by the final estimate. 

Personnel support. — Purchases of personnel sup- 
port services are directly estimated for three 
subcategories — direct hire of foreign nationals, train- 
ing and education, and consulting. Quarterly esti- 
mates for direct hire of foreign nationals are available 
from a survey conducted by DOD for BEA's balance 
of payments accounts. The quarterly estimates are 
summed to calendar year estimates and are seasonally 
adjusted using the Census X-11 procedure. Estimates 
of purchases for training and education services and 
for consulting are based on fiscal year CA data [6A]. 
Quarterly seasonally adjusted estimates are interpo- 
lations without an indicator. 



The advance quarterly estimate generally is a judg- 
mental extrapolation. BPA data on the hire of foreign 
nationals outside of the United States are used as they 
become available, generally by the final estimate. 

Transportation of materiel. — Purchases of trans- 
portation services are directly estimated. Quarterly 
data on disbursements are available in various reports 
from the Military Sealift Command [66] and the Mil- 
itary Traffic Management Command [35]. Quarterly 
obligations incurred by other DOD agencies with re- 
sponsibility for the transportation of materiel, which 
are assumed to equal disbursements, are available in 
FR's [9E, J, P, U]. Quarterly estimates are summed 
to the calendar year estimates and are seasonally ad- 
justed using the Census X-11 procedure. 

The advance quarterly estimate is a judgmental ex- 
trapolation. FR obligations data are used as they be- 
come available, generally by the final estimate. 

Travel of persons. — Purchases of travel, including 
per diem expenses, are directly estimated. Quarterly 
data on disbursements are available in various reports 
from the Military Airlift Command [29]. Quarterly 
obligations incurred by other DOD agencies with re- 
sponsibilities for the travel of persons, which are as- 
sumed to equal disbursements, are available in FR's 
[9E, J, P, U]. Not seasonally adjusted data are used as 
the seasonally adjusted estimates, and quarterly esti- 
mates are summed to calendar year estimates. 

The advance quarterly estimate is a judgmental ex- 
trapolation. FR obligations data are used as they be- 
come available, generally by the preliminary estimate. 

Other services. — Purchases of other services — 
largely services purchased for foreign military as- 
sistance, such as the training of foreign military 
personnel — are directly estimated. Quarterly esti- 
mates for foreign military assistance are from the bal- 
ance of payments accounts [46]. Not seasonally ad- 
justed data are used as the seasonally adjusted esti- 
mates, and quarterly estimates are summed to calen- 
dar year estimates. 

The advance quarterly estimate is an extrapolation 
using 2 months of MTS outlays [77] as the indicator. 
The balance of pajonents accounts data are used as 
they become available, generally by the final estimate. 

Military facilities. — Purchases of military facili- 
ties, such as troop housing and hangars, are recorded 
in the NIPA's on a work-put-in-place basis using the 
directly priced and directly estimated methods. For 
the directly priced purchases, data on the number of 
square feet and cost per square foot (as well as length 
of construction period) are available from construction 
project reports (CPR's) [5] submitted by contractors at 
the beginning and end of each contract. For the di- 
rectly estimated purchases, quarterly disbursements 
are available in FR's [9A, B, F, G, L, O, Q, T]. Not sea- 
sonally adjusted data are used as the seasonally ad- 
justed estimates, and quarterly estimates are summed 
to calendar year estimates. 



42 Government Transactions. 



J^ovemher 1988 



The advance quarterly estimate for directly priced 
purchases is lai-gely a judgmental extrapolation; CPR 
data are used as they become available. The advance 
estimate for directly estimated purchases is an extrap- 
olation using 2 months of MTS outlays as the indica- 
tor. FR disbursements data are used as they become 
available, generally by the final estimate. 

Other structures. — Purchases of other structures, 
which includes family housing and nuclear weapon 
factories, are recorded in the NIPA's on a work-put-in- 
place basis using the directly estimated method. Quar- 
terly disbursements for family housing are available in 
FR's [9A, B, F, G, L, O, Q, T], and value put in place 
for other structures is from the Census Bureau Cur- 
rent Construction Reports [37]. Quarterly estimates 
are summed to calendar year estimates and are sea- 
sonally adjusted using the Census X-11 procedure. 

The advance quarterly estimate for family housing 
is an extrapolation using 2 months of MTS outlays as 
the indicator; FR disbursements data are used as they 
become available, generally by the final estimate. The 
advance estimate for other structures is an extrapola- 
tion using 2 months of value-put-in-place data as the 
indicator; 3 months of data are available for the pre- 
liminary estimate. 

Nondefense purchases 

Total nondefense purchases of goods and services are 
derived by program fi-om budget outlays as a part of 
the fiscal yesu* analysis (see page 19). For most pro- 
grams, nondefense purchases are derived as a resid- 
ual after identiiying all other tj^pes of expenditui'es. 
Quarterly net seasonally adjusted estimates are then 
derived on the basis of this fiscal year analysis; the fis- 
cal year relationship of types of expenditures to total 
expenditures for a program is used to prorate quar- 
terly budget outlays for that program as published in 
the MTS. The sum of the residual expenditures by pro- 
gram accounts for the bulk of nondefense purchases; a 
description of the procedure for the exception, the in- 
ventory change of the Commodity Credit Corporation 
(CCC), follows. These quarterly unadjusted estimates 
of nondefense purchases are summed to calendar year 
estimates. 

Nondefense pxirchases other than CCC inventory 
change are seasonally adjusted at the level of de- 
tail shown in table II-5. Purchases for the strategic 
petroleum reserve, the decennial census, and a few 
other programs show no seasonality, and not season- 
ally adjusted data are used as the seasonally adjusted 
estimates. For estimates that show seasonality, the 
Census X-11 seasonal adjustment procedure is used. 
Pay raises are removed from the "all other purchases" 
category before seasonal adjustment and added back 
to the seasonally adjusted estimate in the same quar- 
ter as they occurred in the unadjusted data. 

For the current quarterly estimates of nondefense 
purchases other than CCC inventory change, the ad- 
vance estimates, with the exception of the estimates 



of imputed financial services and compensation of em- 
ploj^ees, are based on 2 months of MTS outlays in con- 
junction with relationships derived in the fiscal year 
analysis. Three months of MTS outlays are available 
in time for the preliminary estimates. 

The annual and quarterly seasonally adjusted es- 
timates of nondefense purchases other than CCC in- 
ventory change are allocated to type of purchase — 
durable goods, nondurable goods, compensation, other 
services, and structures. This allocation is an essen- 
tial step in the deflation of nondefense purchases and, 
therefore, will be discussed in that section. 

Commodity Credit Corporation. — The nonde- 
fense purchases of the CCC consist of the CCC inven- 
tory change.^ The CCC inventory change is defined in 
the NIPA's to consist of direct purchases, sales, and 
donations of commodities plus the net change in com- 
modity loans. ^ The CCC inventory change has two 
parts — a "regular" inventory change, reflecting CCC 
transaction prices, and a valuation adjustment to take 
CCC transaction prices to market prices. The regular 
inventory change is based on fiscal year and monthly 
data from the Agricultural Stabilization and Conser- 
vation Service (ASCS), U.S. Department of Agricul- 
ture [23]. The prices used to estimate CCC loan and 
inventory transactions at current market prices are 
from Agricultural Prices [26] and from Dairy Market 
Statistics: Annual Summary [22]. The valuation ad- 
justment is the difference between the CCC inventory 
change valued at transaction prices and CCC inven- 
tory change valued at current market prices. 

For each of the 10 commodities shown in table II- 
5, the end-of-quarter quantities of collateral pledged 
for loans outstanding and of inventory are from the 
ASCS. The two quantities are summed to the total 
quantity for the commodity. The quarter-to-quarter 
quantity change is calculated and multiplied by the 
c\.irrent market price for the commodity to obtain the 
CCC inventory change at market value for the com- 
modity. For all other crops, the change in CCC trans- 
action value is used as the CCC inventory change at 
market value. 

An adjustment is made for the lag in posting trans- 
actions in the detailed records, using ASCS data on 
transactions not yet posted. The sum of the inventory 
change for each commodity, the inventory change for 
the all other crops portion, and the accounting adjust- 
ment is the total CCC inventory change. 



4. In NIPA table 3.19, nondefense purchases of the CCC also include an 
imputation for donations of agricultural commodities to private domestic orga- 
nizations. This imputation offsets the effect of the donation on the inventory 
change and yields the appropriate measure of CCC expenditures. The pro- 
grams of the CCC and the NIPA treatment of those programs are discussed 
in "Special Note. — The CCC in the National Income and Product Accounts," 
SURVEY OF CURRENT BUSINESS 62 (January 1982): 6-7 and in "Federal Farm 
Programs for 1986-90," SURVEY OF CURRENT BUSINESS 66 (April 1986): 31- 
35. 

5. Because they have a long history of being repaid, tobacco loans are not 
treated as purchases and CCC generally carries no tobacco inventory. 



Government Transactions. 



^November 1988 



43 



Estimates of CCC inventory change are prepared 
quarterly; the quarterly not seasonally adjusted es- 
timates are summed to calendar year estimates. 

For the quarterly seasonally adjusted estimates, a 
procedure is used that takes advantage of the com- 
modity detail available. For the commodities shown 
in table II-5, the inventory change is derived as ac- 
quisitions less dispositions (with associated accounting 
adjustments). 

Acquisitions are estimated first. For each commod- 
ity, the quantities associated with new loans and di- 
rect purchases made during the quarter are obtained 
from ASCS. The two quantities are summed to the 
total quantity of the commodity acquired during the 
quarter. This quantity is multiplied by the current 
market price for the commodity to obtain CCC acqui- 
sitions at market value for the quarter. For most com- 
modities, the estimates of acquisitions are seasonally 
adjusted using the Census X-11 procedure. For all 
other crops, the CCC transaction value is used as the 
market value of acquisitions. The sum of the acquisi- 
tions developed for each commodity, for all other crops, 
and the accounting adjustment for commodity loans 
made and direct commodity purchases is the season- 
ally adjusted total of CCC commodity acquisitions. 

The disposition of each CCC commodity is prepared 
by subtracting the inventory change for each com- 
modity from the acquisition of the commodity. This 
method is also used to prepare the disposition for all 
other crops. Estimates of dispositions for most CCC 
commodities are seasonally adjusted using the Cen- 
sus X-11 procedure; for the other commodities and the 
accounting adjustments, quarterly not seasonally ad- 
justed data are used as the seasonally adjusted esti- 
mates. The sum of these dispositions and the account- 
ing adjustment for loan repayments and sales is the 
seasonally adjusted total of CCC commodity disposi- 
tions. 

The seasonally adjusted estimates of CCC inventory 
change are derived by subtracting the seasonally ad- 
justed total dispositions from the seasonally adjusted 
total acquisitions. 

For the current quarterly estimates, the amount of 
ASCS data available varies from quarter to quarter, 
particularly for the third quarter, which is the close 
of the fiscal year. For the ASCS data that are not 
available, judgmental estimates are prepared. 

Transfer payments to persons 

Among the categories of expenditures, transfer pay- 
ments to persons is the only category for which 
monthly as well as quarterly estimates are prepared. 
Thus, the second and third columns of table II-5 re- 
fer to source data for monthly estimates, which are 
summed to quarterly estimates. Two recurring fea- 
tures in the methodology for transfer payments to per- 
sons may be noted. First, source data generally in- 
clude payments to all eligible recipients, regardless 



of their residency. Thus, adjustments are generally 
needed to exclude transfer payments to persons liv- 
ing outside the United States from transfer payments 
to persons. Payments to eligible individuals living in 
foreign countries are included in transfer payments to 
foreigners, and payments to residents of U.S. territo- 
ries and the Commonwealth of Puerto Rico, as noted 
earlier, are excluded from the NIPA's. Quarterly data 
for the adjustment for transfer payments to eligible 
individuals living in foreign countries are from BEA's 
balance of pa3Tnents accounts; data for the adjustment 
of transfer payments to residents of territories and 
Puerto Rico are from a variety of sources. For these ad- 
justments, data that are not monthly are prorated over 
the months by total benefit payments of that type. The 
second recurring feature is that many of the programs 
have cost-of-living adjustments (COLA's). Typically, 
these adjustments are tied to a specified change in the 
Consumer Price Index and mandated to be paid at the 
beginning of the calendar year. The effect of COLA's 
is excluded from the source data before seasonal ad- 
justment and added back to the seasonally adjusted 
estimates. 

Old-age, survivors, and disability insurance 

The monthly total OASDI benefits are from the SSA 
[56]. These benefits include regular and retroactive 
payments (that is, payments resulting from the recal- 
culation of the earnings base underlying benefits for 
recent retirees). Estimates of benefits to eligible indi- 
viduals living in foreign countries and to residents of 
U.S. territories and Puerto Rico are subtracted. Quar- 
terly estimates of benefits to foreigners are from BEA's 
balance of payments accounts [46]. Calendar year data 
on benefits to residents of U.S. territories and Puerto 
Rico are from the Social Security Bulletin: Annual 
Statistical Supplement [57]. Monthly estimates are 
summed to calendar year estimates. 

Monthly estimates — except COLA's and retroactive 
payments — are seasonally adjusted using the Census 
X-11 procedure. 

For the current monthly estimates, the first esti- 
mate is based on monthly data on payments from the 
SSA, when available; otherwise, the estimate is a judg- 
mental extrapolation. Following estimates are based 
on the SSA payments data. 

Hospital and supplementary medical 
insurance 

Hospital and supplementary medical insurance ben- 
efits are the sum of monthly benefit outlays from the 
Mrs for the two programs [77]. Estimates of benefits 
going to residents of U.S. territories and Puerto Rico 
are subtracted; the Health Care Financing Adminis- 
tration, Department of Health and Human Services, 
provides unpublished calendar year data on these ben- 
efits. Monthly estimates are summed to calendar year 
estimates. 



44 Government Transactions. 



JNovember 1988 



Monthly seasonally adjusted estimates are interpo- 
lations of the calendar year estimates without an in- 
dicator. 

Current monthly estimates are judgmental extrap- 
olations guided by budget projections. 

State unemployment insvirance 

State vmemployment insurance programs provide 
three types of benefits — ^regular, extended, and re- 
imbursable. In most States, regular benefits cover 
the first 26 weeks of unemployment. Extended ben- 
efits provide continued coverage — in most cases, for 
an additional 13 weeks — for qualified individuals who 
have exhausted regular benefits. Extended benefits 
are available only when a "triggering" formula acti- 
vates the program for the particular State or when a 
national formula activates the program for the entire 
country. Regular and extended benefits are paid to 
eligible former employees of employers paying unem- 
ployment insurance contributions. Reimbursable ben- 
efits are paid under an alternative program available 
to State and local governments and to private non- 
profit organizations. Instead of paying unemployment 
insurance taxes, these employers may choose to re- 
imburse the unemployment insurance trust fund for 
benefits paid to former employees. 

Calendar year data on the three types of benefits are 
available from the Unemployment Insurance Service 
(UIS), Employment and Training Administration [63, 
65]. Benefits to residents of U.S. territories and Puerto 
Rico, also fi-om UIS, are subtracted from each type of 
benefit before the three are combined. Unpublished 
monthly data on benefits paid are provided by the UIS 
for both regular and extended benefits. These data in- 
clude checks never cashed and count twice some bene- 
fits funded from more than one State. These data are 
used as an indicator to prorate the calendar year esti- 
mate (which excludes checks never cashed and double 
counting) for regular and extended benefits. Reliable 
monthly data on reimbursable benefits are not avail- 
able; the calendar year reimbursable estimate is pro- 
rated over months by regular unemployment benefits. 

The not seasonally adjusted data are affected by the 
weekly schedule of processing unemployment benefit 
checks and the occurrence of a holiday at the end of 
a month, when the processing of some checks is post- 
poned until the next month. Adjustments are made to 
standardize the number of working days and to put 
benefits paid following an end-of-the-month holiday 
back into the preceding month. After these adjust- 
ments are made, the estimates are seasonally adjusted 
using the Census X-11 procedure. This approach is 
taken for regular and for reimbursable benefits; for ex- 
tended benefits, not seasonally adjusted data are used 
as the seasonally adjusted estimates. 

Current monthly regular and extended benefits 
are judgmental extrapolations, guided by cash with- 
drawals by States from the unemployment insurance 
trust fund (published in the MTS) and by unemploy- 



ment rates published by the Employment and Training 
Administration [64] and the Bureau of Labor Statis- 
tics [60]. Reimbursable benefits are extrapolated us- 
ing seasonally adjusted regular benefits as the indica- 
tor. 

Railroad unemployment insurance 

Monthly outlays for railroad unemployment insur- 
ance benefits are from the MTS [77]. Monthly esti- 
mates are summed to calendar year estimates. The 
estimates — except COLA's — are seasonally adjusted 
using the Census X-11 procedure. 

For the current monthly estimates, the first esti- 
mate is a judgmental extrapolation and following es- 
timates are based on MTS outlays. 

Federal employees unemployment 
compensation 

Federal employees unemployment compensation in- 
cludes benefits for ixnemployed former civilian employ- 
ees and for unemployed, newly discharged servicemen. 
Each program has benefits comparable to the regular 
and extended State unemployment insurance benefits. 
Estimates are made separately for the two programs 
using the same procedures and sources. 

A fiscal year estimate of total benefits is provided 
by the 0MB from details supporting the Budget Ap- 
pendix [4A-2]; unpublished monthly benefit data are 
available from UIS. Estimates of benefits to residents 
of U.S. territories and Puerto Rico are subtracted; un- 
published monthly data for payments to residents of 
U.S. territories and Puerto Rico are available from the 
UIS. Monthly data are summed to calendar year esti- 
mates. 

The estimates are seasonally adjusted using the 
Census X-11 procedure. Current monthly estimates 
are judgmental extrapolations. 

Special unemployment benefits 

Special unemployment benefits were paid from 1975 
to 1978 and from 1982 to 1985. These temporary ben- 
efits, authorized by legislation during periods of high 
unemployment, were paid to former employees of State 
and local governments and some unemployed farm and 
household workers, whose former employment was not 
covered under the unemployment insurance system, 
and to jobless workers who had exhausted their regu- 
lar and extended benefits. 

Unpublished monthly data for total benefits and for 
benefits paid to residents of U.S. territories and Puerto 
Rico are from the UIS. The latter are subtracted from 
total benefits. Monthly estimates are summed to cal- 
endar year estimates. Not seasonally adjusted data 
are used as the seasonally adjusted estimates. 

Federal civilian employee retirement 

Federal civilian employee retirement benefits are 
paid from the civil service retirement and disabil- 
ity fund, the foreign service retirement and disabil- 
ity fund, the judicial survivors fund, the Federal Re- 



Government Transactions. 



J^ovemher 1988 45 



serve Board retirement fund, and the Tennessee Val- 
ley Authority (TVA) retirement program. In addition, 
retirement benefits are paid to the following: Former 
commissioned officers of the Public Health Service, re- 
tired Federal judges, former lighthouse service person- 
nel and survivors, and certain former employees of the 
National Oceanic and Atmospheric Administration. 

Monthly total outlays for civil service retirement 
and disability are from the MTS [77]. Nonbenefit out- 
lays must be subtracted: Unpublished monthly out- 
lays for administrative costs are available from the 
Fiscal Management Division, Office of Personnel Man- 
agement (0PM); transfers to the foreign service retire- 
ment and disability trust fund are from the MTS [77]; 
and monthly estimates for other nonbenefit outlays are 
fiscal year totals from the Budget Appendix [4A-2] di- 
vided by 12. Estimates of benefits going to eligible in- 
dividuals in foreign countries and to residents of U.S. 
territories and Puerto Rico are subtracted. Quarterly 
estimates of benefits to foreigners are from BEA's bal- 
ance of payments accounts [46]. 0PM provides tm- 
published annual data on benefits to residents of U.S. 
territories and Puerto Rico. 

Foreign service retirement benefits are from the 
MTS [77]; monthly data are summed to calendar year 
estimates. Calendar year benefits for the Federal Re- 
serve Board and the TVA are from the agencies [2 and 
20, respectively]. Fiscal year estimates of the other 
retirement benefits are derived from budget data as 
part of the fiscal year analysis. Monthly estimates are 
interpolations of the fiscal year estimates without an 
indicator. 

Estimates of civil service retirement benefits — 
except cola's — are seasonally adjusted using the 
Census X-11 procedure. For the other benefit pay- 
ments, not seasonally adjusted data are used as the 
seasonally adjusted estimates. 

For the current monthly estimates, the first esti- 
mate is a judgmental extrapolation and following esti- 
mates are based on MTS outlays data for civil service 
and foreign service. 

Military retirement 

Military retirement benefits consist of payments to 
retired military and Coast Guard personnel; data for 
both are from the MTS [77]. Estimates of benefits go- 
ing to residents of foreign countries, U.S. territories, 
and Puerto Rico are subtracted. For military retirees, 
quarterly estimates of benefits to foreigners are from 
BEA's balance of payments accounts [46], and bene- 
fits to residents of U.S. territories and Puerto Rico are 
from sample information published by DOD [49]. For 
Coast Guard retirees, quarterly estimates of benefits 
to foreigners are from BEA's balance of payments ac- 
counts [46]. 

Estimates of benefits for military retirees — except 
cola's — are seasonally adjusted using the Census X- 
11 procedure. For Coast Guard retirees, not season- 



ally adjusted data are used as the seasonally adjusted 
estimates. 

For the current monthly estimates, the first esti- 
mate is a judgmental extrapolation and following es- 
timates are based on MTS outlays data. 

Railroad retirement 

Monthly total outlays for railroad retirement bene- 
fits are from the MTS [77]. Estimates of benefits going 
to eligible individuals living in foreign countries and 
to residents of U.S. territories are subtracted. Quar- 
terly estimates of railroad retirement benefits to for- 
eigners are from BEA's balance of payments accounts 
[46]. Calendar year estimates of railroad retirement 
benefits to residents of U.S. territories and Puerto Rico 
are from the Railroad Retirement Board. 

Not seasonally adjusted data are used as the sea- 
sonally adjusted estimates. 

For the current monthly estimates, the first esti- 
mate is a judgmental extrapolation and following es- 
timates are based on MTS outlays data. 

Veterans life insurance 

Unpublished monthly and calendar year payments 
data are provided by the Office of Budget and Finance 
in the Veterans' Administration (VA) for each of five 
programs [93]: National Service Life Insurance, U.S. 
Government Life Insurance, Service-disabled Veterans 
Life Insurance, Veterans Special Life Insurance, and 
Veterans Reopened Insurance. Transfer payments in- 
clude claims paid by the funds and dividend payments 
to policyholders. Estimates of benefits going to el- 
igible individuals living in foreign countries and to 
residents of U.S. territories and Puerto Rico are sub- 
tracted. Quarterly estimates of payments to foreign- 
ers are from BEA's balance of payments accounts [46]. 
Fiscal year estimates of payments to residents of U.S. 
territories and Puerto Rico are from the VA's Annual 
Report [92]. 

In most years, dividends are paid to policyholders 
in the month of their policy anniversary. In a few 
years, however, all dividends due in a calendar year 
have been paid early in the calendar year. When div- 
idends are paid throughout the year, the seasonally 
adjusted estimates of the total of claims and dividends 
are prepared using the Census X-11 procedure. When 
dividend payments are accelerated, not seasonally ad- 
justed data are used as the seasonally adjusted esti- 
mates. 

For the current monthly estimates, the first esti- 
mate is a judgmental extrapolation and following es- 
timates are based on VA payments data. 

Workers' compensation 

Unpublished monthly data for workers' compensa- 
tion benefits are provided by the Employment Stan- 
dards Administration, Department of Labor. Monthly 
estimates are summed to a calendar year estimate. 
Seasonally adjusted estimates are prepared by inter- 
polation of the calendar year estimate — except benefit 



46 Government Transactions. 



J^ovember 1988 



increases — without indicator; the benefit increases are 
then added back to the appropriate month. The cur- 
rent monthly estimates are judgmental extrapolations 
guided by budget projections. 

Military medical insurance 

The Civilian Health and Medical Program of the 
Uniformed Ser\'ices (CHAMPUS) pays for medical care 
provided at nonmilitary facilities to retired military 
personnel and to dependents of active duty and retired 
military personnel. Benefits to dependents of active 
duty personnel are treated as benefits from social in- 
surance funds. Benefits to retired military personnel 
and their dependents are included in other transfer 
payments to persons, but are discussed in the follow- 
ing paragraph. 

The benefits to dependents of active duty person- 
nel are treated as paid by a social insurance fund in 
order to make the compensation of military person- 
nel comparable to the compensation of other govern- 
ment and private sector employees. A social insurance 
contribution — equal to the benefits paid — is imputed 
to the military employer. The imputed contribution 
is included in government receipts and in government 
expenditures; in the latter, it is included as compen- 
sation of military personnel in national defense pur- 
chases. Monthly benefits data are provided by DOD 
[50, 51], separately for retired personnel and their de- 
pendents and for dependents of active duty personnel. 
Monthly data are summed to quarterly and calendar 
year estimates. 

Quarterly not seasonally adjusted data are used as 
the seasonally adjusted estimates. Monthly estimates 
are interpolations of the quarterly estimates without 
an indicator. 

Current monthly estimates are judgmental extrap- 
olations guided by budget projections. 

Veterans pension and disability 

Monthly total outlays for pension and disability ben- 
efits are from the MTS [77]. Benefits are usually paid 
on the first of the month, but when the first of the 
month is a weekend or holiday, the checks are paid 
on the previous working day. An adjustment is made 
to treat these early checks as if they had been paid in 
the following month. Unpublished data for the adjust- 
ment is provided by the Office of Budget and Finance 
in the VA. Benefits for wives, widows, and children of 
veterans, which are included in readjustment benefits 
in the budget data, are added to pension and disability 
benefits. Unpublished quarterly data for these smaller 
programs are provided by the Office of Budget and Fi- 
nance; these quarterly data are divided by 3 to obtain 
monthly data. Estimates of benefits to eligible individ- 
uals living in foreign countries and to residents of U.S. 
territories and Puerto Rico are subtracted. Quarterly 
estimates of benefits to foreigners are from BEA's bal- 
ance of payments accounts [46]. Fiscal year estimates 
of benefits to residents of U.S. territories and Puerto 



Rico are from the VA's Annual Report [92]. Monthly 
data are summed to calendar year estimates. 

Estimates — except COLA's — are seasonally ad- 
justed using the Census X-11 procedure. 

For the current monthly estimates, the first esti- 
mate is a judgmental extrapolation guided by budget 
projections and following estimates are based on MTS 
outlays data for veterans pensions and disability. 

Veterans readjustment 

Monthly total outlays for veterans readjustment 
benefits are from the MTS [77]. Benefits are usually 
paid on the first of the month, but when the first of 
the month is a weekend or holiday, the checks are 
paid on the previous working day. An adjustment is 
made to treat these early checks as if they had been 
paid in the following month. Unpublished data for the 
adjustment is provided by the Office of Budget and 
Finance in the VA. The previously discussed benefits 
for wives, widows, and children of veterans are sub- 
tracted. Unpublished quarterly data for these smaller 
programs are provided by the Office of Budget and Fi- 
nance; these quarterly data are divided by 3 to obtain 
monthly data. Estimates of benefits to eligible individ- 
uals living in foreign countries and to residents of U.S. 
territories and Puerto Rico are subtracted. Quarterly 
estimates of benefits to foreigners are from BEA's bal- 
ance of payments accounts [46]. Fiscal year estimates 
of benefits to residents of the territories and Puerto 
Rico are from the VA's Annual Report [92]. Monthly 
data are summed to calendar year estimates. 

Calendar year estimates are interpolations using a 
judgmental indicator that reflects COLA's and trends 
in the number of beneficiaries. 

Current monthly estimates are judgmental extrap- 
olations guided by budget projections. 

Food stamp benefits 

Unpublished monthly total food stamp benefits and 
fiscal year benefits paid to residents of U.S. territo- 
ries are provided by the Food and Nutrition Service 
(FNS), U.S. Department of Agriculture [24]. The fiscal 
year data on benefits paid to residents of U.S. territo- 
ries are prorated over the months by total food stamp 
benefits and subtracted from the total. Monthly data 
are summed to calendar year estimates. Estimates — 
except COLA's — are seasonally adjusted using the 
Census X-11 procedure. 

For the current monthly estimates, the first esti- 
mate is a judgmental extrapolation guided by budget 
projections and following estimates are based on data 
for total benefits from FNS. 

Black lung benefits 

Black lung benefits consist of payments by the SSA 
to persons who began receiving benefits before July 
1, 1973, and payments made by the Department of 
Labor to persons who qualified after that date. For 
the SSA component, unpublished monthly benefits are 
provided by the Office of the Actuary, SSA; monthly 



Government Transactions. 



JMovember 1988 47 



data are summed to a fiscal year total. This total is 
compared with a more accurate total from the Bud- 
get Appendix [4A-2], and the months are adjusted if 
necessary. The same procedure is followed for the La- 
bor Department payments using unpublished monthly 
benefits from the Employment Standards Administra- 
tion. 

Not seasonally adjusted data are used as the sea- 
sonally adjusted estimates. 

For the current monthly estimates, the first esti- 
mate is based on the monthly benefits data, when 
available; otherwise, the estimate is a judgmental ex- 
trapolation guided by budget projections. Following 
estimates are based on the monthly data. 

Supplemental security income 

Fiscal year supplemental security income (SSI) ben- 
efits are from the Budget Appendix [4A-2] and monthly 
benefits are from the SSA Monthly Benefit Statistics 
[56]. The fiscal year total is prorated over months by 
the SSA monthly benefits. Monthly data are summed 
to calendar year estimates. 

In 1974, when a number of grant-in-aid programs 
were replaced by the SSI program, the Federal Gov- 
ernment established a State-by-State benefit level and 
guaranteed that State costs would not be increased 
by implementation of the new benefit level. This re- 
sult was accomplished by an additional Federal "hold- 
harmless" transfer payment that was to be phased 
out; the last such payments were in 1984. Fiscal 
year 'Tiold-harmless" benefits were from the Budget 
Appendix [4A-2]. Monthly estimates were obtained by 
dividing the fiscal year estimate by 12; monthly esti- 
mates were summed to calendar year estimates. 

Not seasonally adjusted data are used as the sea- 
sonally adjusted estimates. 

For the current monthly estimates, the first esti- 
mate is a judgmental extrapolation and following es- 
timates are based on benefits data from the SSA. 

Earned income credit 

Monthly outlays for the earned income credit are 
from the MTS [77] and are summed to calendar year 
estimates. Monthly seasonally adjusted estimates are 
prepared by dividing the calendar year total by 12. 
Current monthly estimates are judgmental extrapola- 
tions guided by budget projections. 

Other transfer pajrments to persons 

Other transfer payments include payments under 
numerous programs, such as to nonprofit institutions 
(exclusive of payments for research and development 
carried out by these institutions), educational aid to 
students, annuity payments, and trade adjustment as- 
sistance. 

For payments to nonprofit institutions, the fiscal 
year payments are derived from budget data as part 
of the fiscal year analysis; quarterly estimates are de- 
rived from MTS data [77] using fiscal year relation- 



ships. Quarterly estimates are summed to calendar 
year estimates. 

For trade a(^ustment assistance, a fiscal year total is 
from the Budget Appendix [4A-2]. The fiscal year total 
is prorated over months by unpublished monthly ben- 
efit data from the Employment and Training Admin- 
istration. The monthly estimates are summed to cal- 
endar year estimates. For Alaska native claims, fiscal 
year payments are derived from budget data as part 
of the fiscal year analysis. Quarterly estimates are 
derived from MTS data [77] using fiscal year relation- 
ships. Quarterly estimates are summed to calendar 
year estimates. For all others, fiscal year payments 
are derived from budget data as part of the fiscal year 
analysis. Monthly benefits for these programs are pre- 
pared by interpolating fiscal year estimates without an 
indicator. Monthly estimates are summed to quarterly 
and calendar year estimates. 

For payments to nonprofit institutions, seasonally 
adjusted estimates are interpolations of the calendar 
year estimates without an indicator. 

For Alaska native claims, monthly seasonally ad- 
justed estimates are derived by dividing the calendar 
year total by 12. For all others, not seasonally ad- 
justed data are used as the seasonally adjusted esti- 
mates. 

For the current monthly estimates, the first esti- 
mate of other transfer payments is a judgmental ex- 
trapolation guided by budget projections and following 
estimates are based on unpublished trade adjustment 
assistance data from the Employment and Training 
Administration. 

Transfer payments to foreigners 

Federal Government transfer payments to for- 
eigners are discussed in Foreign Transactions, BEA 
Methodology Paper Series MP-3 [41]. 

Grants-in-aid to State and local 
governments 

Quarterly estimates are prepared for about 180 
grant programs: Most are prepared using MTS out- 
lays in conjunction with relationships derived from the 
fiscal year analysis; a few are fiscal year estimates 
divided by 4. Grants-in-aid to U.S. territories and 
Puerto Rico are subtracted, using information from the 
Department of Treasury [75], the Bureau of the Cen- 
sus [38], and administering agencies. Quarterly esti- 
mates, grouped as shown in table II-5, are summed to 
calendar year estimates. 

Seasonally adjusted quarterly estimates for most 
groups of programs are prepared using the Census 
X-11 procedure or using not seasonally adjusted data 
as the seasonally adjusted estimates, as shown in ta- 
ble II-5. For a few programs with sporadic payment 
patterns, seasonally adjusted estimates are prepared 
by interpolating the calendar year totals over quar- 



48 Government Transactions. 



^November 1988 



ters w-ithout an indicator. This procedure is used, for 
example, for the Federal payment to the District of 
Columbia; the payment is usually paid out in one or 
two installments, but the timing varies widely from 
year to year. 

For the current quarterly estimates, the advance es- 
timates are based on 2 months of MTS outlays [77] 
in conjunction with relationships derived in the fiscal 
year analysis. Three months of data are available for 
the preliminary estimates. 

Net interest paid 

Net interest paid is derived as interest paid less in- 
terest received, including imputed interest received. 
Interest paid consists of interest paid on public debt 
securities and other interest paid, largely for agency 
borrowings. The interest paid on public debt securi- 
ties, as presented in the MTS [77], is in two parts: (1) 
Accrued interest on "public issues," and (2) cash inter- 
est paid on "special issues." The public issues interest 
is largely paid to the public, including foreigners, but 
is paid also to Federal funds such as the social secu- 
rity trust fund. The special issues interest is largely 
paid to Federal funds, but is also paid to the public, 
including foreigners. (As noted in discussing taxes, in- 
terest paid on tax refunds is included in NIPA taxes 
rather than in interest paid.) Interest received con- 
sists largely of interest on direct loans made by a large 
number of Federal agencies, such as the Department 
of Agriculture, Agency for International Development, 
and the Department of Housing and Urban Develop- 
ment. 

Interest paid to persons and business 

Interest paid to persons and business is derived from 
budget data as part of the fiscal year analysis.^ Data 
are not available to implement the methodology for the 
fiscal year analysis on a calendar year or quarterly ba- 
sis. The approach used to derive quarterly estimates is 
to interpolate with an indicator a fiscal year estimate 
of public debt (public issues and special issues) inter- 
est paid to persons and business. The indicator is the 
MTS [77] public issues interest less interest paid to 
foreigners, the latter from BEA's balance of payments 
accoiints [46]. A fiscal year estimate of other interest 
paid, derived as part of the fiscal year analysis, is in- 
terpolated over quarters without indicator. Quarterly 
estimates are summed to calendar years. 

Quarterly seasonally adjusted estimates are pre- 
pared using the Census X-11 procedure. 

For the current quarterly estimates, the advance es- 
timate is based on 2 months of MTS data for pub- 
lic issues interest and a projection of foreign interest 



paid. For public issues interest, the third month of 
MTS data is available for the preliminary estimate. 
For foreign interest, data are available for the final 
estimate. 

Interest paid to foreigners 

This estimate comes from BEA's balance of pay- 
ments accounts, tables 1 and 2, line 29 [46]. The 
methodology is discussed in Foreign Transactions, 
BEA Methodology Paper Series MP-3 [41]. 

Monetary interest received from persons and 
business 

Monetary interest received from persons and busi- 
ness is derived from budget data as part of the fiscal 
year analysis. The fiscal year estimates are interpo- 
lated quarterly without an indicator; quarterly esti- 
mates are summed to calendar year estimates. Not 
seasonally adjusted data are used as the seasonally 
adjusted estimates. Current quarterly estimates are 
judgmental extrapolations guided by budget projec- 
tions. 

Monetary interest received from foreigners 

The starting point for this estimate is tables 1 and 
2, line 14, from the balance of pa^onents accounts [46]. 
It consists of interest received by the U.S. Government 
and the Federal Reserve banks. Unpublished data on 
the Federal Reserve banks' portion is subtracted from 
the published total to derive the NIPA estimates. 

For the current quarterly estimates, the advance 
and preliminary estimates are projections. Data are 
available for the final estimate. 

Imputed interest received 

The estimate of imputed interest paid to the Fed- 
eral Government is prepared as part of the estimates 
of imputed interest and associated service charges for 
the other sectors. It is the Federal Government share 
of imputed interest paid by commercial banks and by 
Federal Reserve banks. The share of imputed inter- 
est is based on the share of Federal deposits in total 
deposits at commercial banks and at Federal Reserve 
banks; the data on deposits are from the Federal De- 
posit Insurance Corporation [8] and the Board of Gov- 
ernors of the Federal Reserve System [1].'' Quarterly 
seasonally adjusted estimates are derived by interpo- 
lation, using seasonally adjusted flow of funds account 
data on holdings as the indicator [3]. Current esti- 
mates are judgmental extrapolations. 



6. The fiscal year estimate is the sum of interest paid on public issues 
and special issues; less foreign interest paid; less interest paid to Federal 
funds, using interest received by those funds as a proxy; plus other interest 
paid to persons and business. Data, except for foreign interest paid, are 
from budget documents; the foreign interest paid is from BEA's balance of 
payments accounts [46]. 



7. For commercial banks, total payments of im.puted interest equal the 
sum of monetary interest received on depoeitxjrs' funds, dividends received, 
income received on direct lease financing, and imputed interest received ftx)m 
Federal Reserve banks less interest paid on deposits. For the Federal Reserve 
banks, total payments of imputed interest equal monetary interest received 
less current net earnings (after deduction of assessments for the Board of 
Governors) less dividends paid. 



Government Transactions. 



JNovemher 1988 



49 



Subsidies less the current surplus of 
government enterprises 

Subsidies 

Federal Government subsidy payments are mainly 
in support of agriculture, housing, maritime shipping, 
railroads, air carriers, and mass transit. For all ex- 
cept agricultural subsidies, fiscal year estimates are 
derived from budget data as part of the fiscal year 
analysis. Most quarterly estimates are prorations of 
fiscal year estimates using MTS outlays as the indi- 
cator and, for the current estimates, judgmental ex- 
trapolations guided by budget projections. Quarterly 
estimates are summed to calendar year estimates. 

Most agricultural subsidies are paid by the CCC; a 
few are paid by the Agricultural Stabilization and Con- 
servation Service (ASCS). Fiscal year CCC subsidies 
are from subsidy detail in the Repori of Financial Con- 
dition and Operations of the Commodity Credit Corpo- 
ration [23]; quarterly estimates are from unpublished 
data from the ASCS, which administers the CCC pro- 
grams. For other agricultural subsidies, fiscal year es- 
timates are derived from budget data as part of the fis- 
cal year analysis; quarterly estimates are derived from 
MTS outlays [77]. Quarterly estimates are summed to 
calendar years. 

Subsidies are seasonally adjusted at the level of de- 
tail shown in table II-5. Seasonally adjusted estimates 
for most subsidies are prepared by interpolating with- 
out indicator and extrapolating judgmentally. Mar- 
itime construction subsidies are seasonally adjusted 
using the Census X-11 procedure. For the remaining 
subsidies, not seasonally adjusted data are used as the 
seasonally adjusted estimates. 

The current quarterly estimates of CCC subsidies 
are based on payments data from the ASCS. Current 
estimates of most other subsidy payments are judg- 
mental extrapolations guided by budget projections. 

Current surplus of govenrment enterprises 

As of 1988, there are 20 Federal Government en- 
terprises (Appendix II-B). Table II-5 shows the level 
of detail at which their current surplus is estimated 
quarterly. For the Postal Service, the Federal Hous- 
ing Administration, and the Tennessee Valley Author- 
ity, fiscal year estimates are derived using agency fi- 
nancial reports [88, 90, 58, 19, respectively] as part 
of the fiscal year analysis. For all others, except the 
CCC, fiscal year estimates are derived from budget 
data as part of the fiscal year analysis. Quarterly es- 
timates are interpolations without an indicator and, 
for the current estimates, judgmental extrapolations 
guided by budget projections; quarterly estimates are 
summed to calendar year estimates. 

The current suit)1us of the CCC has two parts — a 
"regular" current surplus and a valuation adjustment 
to deal with the pricing of CCC inventory transactions. 
The fiscal year estimate of the "regular*" current sur- 
plus is from detailed data on income and expenses 



[23]. Quarterly estimates are interpolations without 
indicator and judgmental extrapolations, and they are 
summed to calendar year estimates. The valuation 
adjustment offsets the adjustment in nondefense pur- 
chases so that total expenditures are recorded, as re- 
quired, at transaction prices. The derivation of mar- 
ket value inventory change is discussed in detail in 
the nondefense purchases section; the valuation ad- 
justment is calculated at every step of the procedure 
described there. 

Current surpluses are seasonally adjusted at the 
level of detail shown in table II-5. For the Postal 
Service, the calendar year estimate — except pay raises 
and postal rate increases — is interpolated over quar- 
ters without indicator; pay raises and postal rate 
increases are added to the seasonally adjusted esti- 
mates. The current surplus of other government en- 
terprises except the CCC valuation adjustment is also 
interpolated without indicator. For the CCC valu- 
ation adjustment, seasonally adjusted estimates are 
prepared for acquisitions and dispositions of each com- 
modity, either using the Census X-11 procedure or us- 
ing not seasonally adjusted data as the seasonally ad- 
justed estimate. 

Current quarterly estimates of the CCC valuation 
adjustment are derived from the information used to 
estimate the CCC inventory change component of non- 
defense purchases. Current estimates of all other cur- 
rent surpluses are judgmental extrapolations guided 
by budget projections. 

Wage accruals less disbursements 

The estimates of wage accruals less disbursements, 
which convert wages and salaries from the accrual ba- 
sis used in purchases and in current surplus of govern- 
ment enterprises to a pa5mients basis in total expen- 
ditures, are prepared along with the other compensa- 
tion estimates. Differences between accruals and dis- 
bursements arise because of retroactive pay raises — 
especially in recent years for Postal Service employees. 
Information on the amounts of retroactive pay raises 
is from affected agencies. 

Surplus or deficit (—), national income 
and product accounts 

This measure is the excess of total receipts over total 
expenditures; it represents the contribution of the Fed- 
eral Government sector to sources of funds for other 
sectors. 

The NIPA surplus or deficit measure is divided into 
two parts; the surplus or deficit generated by the ex- 
cess of social insurance system receipts over the out- 
lays of the systems, and the surplus or deficit resulting 
from all other government transactions. To accomplish 
this division, the part of purchases that represents 
administrative expenses of social insurance systems 
that are paid from system revenues must be identi- 



50 Government Transactions. 



Jslovember 1988 



fied. Data for administrative expenses are from the 
fiscal year analysis and the MTS [77] using relation- 
ships from the fiscal year analysis. These data are 
summed to quarters and calendar years. Quarterly 
seasonally adjusted estimates are interpolations of the 
annual estimates without an indicator; current quar- 
terly estimates are judgmental extrapolations guided 
by budget projections. 

The social insurance fund surplus is calculated as 
the sum of contributions and interest received by so- 
cial insurance systems (the latter from the MTS [77]), 
less the sum of social insurance benefits and adminis- 
trative expenses. 

The other funds surplus or deficit equals the NIPA 
surplus or deficit minus the social insurance fund sur- 
plus. 



Constant-Dollar Purchases of 
Goods and Services 

Constant-dollar estimates of Federal Government 
purchases of goods and services are prepared using 
one of three methods. For compensation of employ- 
ees and imputed financial services, base-year values 
are extrapolated by quantity indicators. For national 
defense purchases of a variety of goods and some ser- 
vices, for Commodity Credit Corporation purchases of 
farm commodities, and for certain purchases and sales 
of petroleum, quantities are directly priced (or val- 
ued). For other purchases, current-dollar estimates 
are deflated by (that is, divided by) suitable price in- 
dexes. For a substantial portion of national defense 
purchases of goods and services, the price indexes are 
prepared by BEA using information on prices paid by 
the Department of Defense (DOD).'* For other goods 
and sej^vices, the price indexes include those taken 
from the Census Bureau Current Construction Reports 
[37], BLS CPI Detailed Report [59], and BLS Producer 
Prices and Price Indexes [62] or constructed from aver- 
age hourly earnings from BLS Employment and Earn- 
ings [60]. 

Table II-8 indicates which of the three methods is 
used for the components and provides an overview 
of the source data used. The source data shown for 
the July revision provide both annual and quarterly 
estimates; the source data for the current quarterly 
estimates are often less complete and less detailed. 
Tests are made for seasonality and in the relatively 
few cases where seasonality is present, the Census X- 
11 procedure is used. 



8. As noted for current-dollar national defense purchases, many of the data 
sources were identified in a major project undertaken with DOD [44]. Prior to 
1972, constant-dollar purchases were estimated at the total Federal Govern- 
ment level only; there was no distinction made between national defense and 
nondefense purchases. At the total level, 15 types of purchases — including 
mihtary compensation, Commodity Credit Corporation inventory change, and 
structures — were extrapolated or deflated. 



National defense purchases 

As noted earlier, the "directly priced" method of 
preparing current-dollar estimates is preferred. For 
the pieces of constant-dollar purchases that are di- 
rectly priced, the quantity data are the same as 
that used for current-dollar estimates. The appropri- 
ate base-year price is one that ensures that changes 
in quality are reflected in constant-dollar series as 
changes in quantity. The primary technique used to 
separate quality change from price change is specifi- 
cation pricing. 

Specification pricing, as implemented for defense 
goods and services, consists of determining the rele- 
vant physical characteristics of an item and holding 
them constant over time. (For a more detailed dis- 
cussion, see Price Changes of Defense Purchases of the 
United States [44].) As long as these characteristics 
are unchanged, any change in the amount paid for 
an item is a price change. When the characteristics 
change, the change is evaluated to determine the per- 
formance and cost effects. If the performance is en- 
hanced, the associated quality increase is measured 
by the cost change. 

Four principal procedures are used to calculate the 
amount by which the reported price for the base year 
must be adjusted to take into account changes in qual- 
ity: Linking, direct comparison, producer cost, and 
overlap pricing. These procedures are described in 
terms of their use in the direct pricing method, but 
comparable procedures are also used to construct in- 
dexes of DOD prices that are used in deflation. 

The linking procedure is used when the character- 
istics change and the entire difference in price (before 
and after the characteristic change) is assumed to be 
a quality difference. The adjustment is calculated as 
the ratio of the "new" to the "old" price. This procedure 
makes the value of the quality change in base-period 
prices directly proportional to the value of the quality 
change in current-period prices. 

The direct comparison procedure is used when the 
characteristics change but there is no impact on per- 
formance so the entire difference in price is a price 
change. The adjustment is defined to be 1.0, and the 
ratio of the "new" to the "old" price is fully reflected as 
a price change. 

The producer cost procedure consists of evaluat- 
ing each characteristic change to an item to determine 
if it is a quality change. If it is a quality change, the 
cost to the producer of making the change is deter- 
mined. The value of the quality change is defined as 
the cost to the producer of making the change in the 
current period. The adjustment is calculated as the ra- 
tio of the unreconfigured item plus the cost of quality 
changes to the unreconfigured item. Any difference in 
the price of an item, other than the cost of producing 
a quality change, is defined as a price change. 

The overlap pricing procedure is essentially the 
same as linking, but "new" and "old" prices may have 
to be adjusted before the link is made. This technique 



Government Transactions. 



Jslovember 1988 



51 



Table 11-8. — Constant-Dollar Federal Government Purchases of Goods and Services: Sources of Estimates 



Category 



Method 



Calendar 

year 1982 

(Billions of 

dollars) 



July revision ' 



Current quarterly estimates 



Advance 



Preliminary 



Final 



National defense 

Durable goods 

Aircraft 

Missiles 

Ships 



Vehicles. 



Electronic equipment. 



Other equipment . 



Other durable goods . 



Nondurable goods 

Petroleum products.... 



Ammunition . 



Other nondurables . 



Sum of detail 

Sum of detail 

Directly priced: 
Quantities 

Prices 

Deflation: DOD 
prices. 

Directly priced: 
Quantities 

Prices 

Deflation: DOD 
prices. 

Deflation: 

Shipyard prices 

for "frozen 

ship". 
Directly priced: 

Quantities 

Prices 

Deflation: Proxy 
prices. 

Directly priced: 
Quantities 

Prices 

Deflation: DOD 
prices. 

Deflation: DOD 

prices. 
Deflation: Proxy 

prices. 

Deflation: DOD 

prices. 
Deflation: Proxy 

prices. 

Deflation: DOD 

prices. 
Deflation: Proxy 

prices. 



Sum of detail... 
Directly priced . 



Deflation: DOD 
prices. 

Directly priced: 

Quantities 

Prices 



Deflation: DOD 

prices. 
Deflation: Proxy 

prices. 

Deflation: DOD 

prices. 
Deflation: Proxy 

prices. 



193.8 
49.2 



7.4 

9.4 
2.0 

3.7 
3.4 



2.3 



1.7 



1.2 

.6 
2.5 

3.4 
2.4 

3.5 
5.4 



13.6 



8.1 

1.1 
.2 

1.8 
.3 

1.0 
1.1 



PCR's 

CCDR's 

ICS and aircraft 
IPD's. 

PCR's 

CCDR's 

ICS and missiles 
IPD's. 

Shipyard prices 

PCR's 

CCDR's 

PPI's 

PCR's 

CCDR's 

ICS and vehicles 
IPD's. 

ICS 

PPI's 

ICS 

PPI's 

ICS 

PPI's/BEA computer 
price index. 

PPR's 

Petroleum IPD's 

Budget data 

CCDR's 

ICS 

PPI's 

ICS 

PPI's 



Budget or, when 
available, PCR's. 

Budget or, when 
available, CCDR's. 

Aircraft IPD's 



Budget or, when 
available, PCR's. 

Budget or, when 
available, CCDR's 

Missiles IPD's 

Extrapolated 
judgmentally or, 
when available, 
shipyard prices. 

Budget or, when 
available, PCR's. 

Budget or, when 
available, CCDR's 

2 mos. PPI's 

Budget or, when 
available, PCR's. 

Budget or, when 
available, CCDR's 

Vehicles IPD's 

2 mos. PPI's 

2 mos. PPI's 

2 mos. PPI's 

2 mos. PPI's 

2 mos. PPI's 

2 mos. PPI's/BEA 
computer price 
index. 



Extrapolated 
judgmentally or, 
when available, 
PPR's. 

Petroleum IPD's 

Budget data 

Budget or, when 

available, CCDR's 
2 mos. PPI's 

2 mos. PPI's 

2 mos. PPI's 

2 mos. PPI's 



More PCR's 

More CCDR's 

Aircraft IPD's 

More PCR's 

More CCDR's 

Missiles IPD's 

Extrapolated 
judgmentally or, 
when available, 
shipyard prices. 

More PCR's 

More CCDR's 

3 mos. PPI's 

More PCR's 

More CCDR's 

Vehicles IPD's 

3 mos. PPI's 

3 mos. PPI's 

3 mos. PPI's 

3 mos. PPI's 

3 mos. PPI's 

3 mos. PPI's/BEA 
computer price 
index.. 

More PPR's 

Petroleum IPD's.. 

Budget data 

More CCDR's 

3 mos. PPI's 

3 mos. PPI's 

3 mos. PPI's 

3 mos. PPI's 



Many PCR's. 
Many CCDR's. 
Aircraft IPD's. 

Many PCR's. 
Many CCDR's. 
Missiles IPD's. 

Extrapolated 
judgmentally or, 
when available, 
shipyard prices. 

Many PCR's. 

Many CCDR's. 

3 mos. PPI's. 

Many PCR's. 
Many CCDR's. 
Vehicles IPD's. 

3 mos. PPI's. 
3 mos. PPI's. 

ICS. 

3 mos. PPI's. 

3 mos. PPI's. 

3 mos. PPI's/BEA 
computer price 
index. 



PPR's. 

Petroluem IPD's. 

Budget data. 
Many CCDR's. 

3 mos. PPI's. 

3 mos. PPI's. 

3 mos. PPI's. 
3 mos. PPI's. 



See footnotes at end of table. 



52 Government Transactions. 



Jslovember 1988 



Table 11-8.— Constant-Dollar Federal Government Purchases of Goods and Services: Sources of Estimates- 
Continued 





Method 


Calendar 

year 1 982 

(Billions of 

dollars) 


July revision ■ 


Current quarterly estimates 


Category 


Advance 


Preliminary 


Final 


Services 


Sum of detail 


127.1 

84.0 

55.0 

1.6 

27.4 

43.2 

16.3 

3.2 
8.8 
3.0 
2.5 
2.0 
1.6 
3.2 
2.6 

(*) 

3.9 

.7 

1.6 
1.6 


Employment by rank 
and length of 
service from MR. 

Compensation 
report. 

OPM employment 
(by grade and 
step) and average 
hours worked. 

R&D contractor 
prices/3 mos. 

3PI'S. 

Contracts 


2 mos. employment 
from MR. 

Compensation 
report. 

OPM employment 

Extrapolated 

judgmentally and 

2 mos. PPI's. 
Contracts 


3 mos. employment 
from MR. 

Compensation 
report. 

OPM employment 

R&D contractor 

prices/3 mos. 

PPI's. 
Contracts 




Compensation 


Sum of detail 




Military 
compensation. 

Civilian 
compensation. 

Other services 


Extrapolation 

Deflation: DOD 

prices. 
Extrapolation 

Sum of detail 

Deflation: DOD 

and proxy 

prices. 
Deflation: DOD 

prices. 
Deflation: Proxy 

prices. 
Deflation: DOD 

prices. 
Deflation: Proxy 

prices. 
Deflation: DOD 

prices. 
Deflation: Proxy 

prices. 
Deflation: DOD 

prices. 

Deflation: DOD 

and proxy 

prices. 
Deflation: Proxy 

prices. 

Sum of detail 

Directly priced 

Deflation: DOD 
prices. 

Deflation: Proxy 
prices. 


3 mos. employment 
from MR. 

Compensation 
report. 

OPM employment. 


Contractual 
research and 
development. 

Installation support . 

Weapons support... 


R&D contractor 
prices/3 mos. 
PPI's. 

Contracts 


3 mos. CPI's/PPI's/ 
AHE's/ER's. 

Contracts 


2 mos. CPI's/PPI's/ 
AHE's/ER's. 

Contracts 


3 mos. CPI's/PPI's/ 

AHE's/ER's. 
Contracts 


3 mos. CPI's/PPI's/ 
AHE's/ER's. 

Contracts. 


AHE's 


2 mos. AHE's 


3 mos. AHE's 


3 mos AHE's 


Personnel support.. 


Contracts/ER's 


Contracts/foreign 

wage rates/ER's. 
2 mos. AHE 


Contracts/foreign 

wage rates/ER's. 
3 mos. AHE 


Contracts/foreign 

wage rates/ER's. 
3 mos. AHE. 


AHE 


Transportation of 

materiel. 
Travel of persons.... 

Other 


MSC/MTMC 


MSC/MTMC 


MSC/MTMC 


MSC/MTMC. 


MTMC/GSA/CPI's 

3 mos. AHE's 


MTMC/GSA/2 mos. 
CPI's. 

2 mos. AHE's 


MTMC/GSA/3 mos. 
CPI's. 

3 mos. AHE's 


MTMC/GSA/3 mos. 
CPI's. 

3 mos. AHE's. 


Structures 


CPR's 


Judgmentally and 

Military facility lPD/2 
mos. ER's. 

Private-sector cost 
indexes/Federal 
Highway Admin./2 
mos. ER's. 


More CPR's 




Military facilities 


Many CPR's. 


Other structures 


Military facility IPD/ 
ER's. 

Private-sector cost 
indexes/Federal 
Highway Admin./ 
ER's. 


Military facility lPD/3 
mos. ER's. 

Private-sector cost 
indexes/Federal 
Highway Admin. /3 
mos. ER's. 


Military facility IPD/3 
mos. ER's. 

Private-sector cost 
indexes/Federal 
Highway Admin./3 
mos. ER's. 



See footnotes at end of table. 



Government Transactions. 



JNovember 1988 53 



Table 11-8. — Constant-Dollar Federal Government Purchases of Goods and Services: Sources of Estimates- 
Continued 





Method 


Calendar 
year 1982 
(Billions of 

dollars) 


July revision ' 


Current quarterly estimates 


Category 


Advance 


Preliminary 


Final 


Nondefense 


Sum of detail 


78.9 
3.1 

(*) 

3.1 

14.9 

9.0 

.2 

5.7 
2.2 

-1.6 
5.1 

54.3 

33.1 

21.2 
1.1 

.4 

19.7 

6.6 


ICS 


2 mos PPI's 


3 mos PPI's 




Durable goods 


Sum of detail 




Medical equipment 

Other durable goods .. 

Nondurable goods 

Commodity Credit 
Corporation. 


Deflation: VA 
prices. 

Deflation: Proxy 
prices. 

Sum of detail 


3 mos PPI's 


PPI's/BEA computer 
price index. 

ASCS 


2 mos. PPI's/BEA 
computer price 
index. 

1 mo. ASCS 


3 mos. PPI's/BEA 
computer price 
index. 

2 mos. ASCS ... 


3 mos. PPI's/BEA 
computer price 
index. 


Directly priced: 
Quantities 


3 mos ASCS 




Prices 


NASS/AMS 


1 mo. NASS/AMS 

2 mos. PRF. 


2 mos. NASS/AMS... 

3 mos PRF 


3 mos NASS/AMS 




Deflation: Proxy 
prices. 

Sum of detail 


PRF 


3 mos PRF 


Other nondurable 


DOE 


2 mos. DOE 


3 mos DOE 




goods. 
Strategic 

petroleum 

reserve 

purchases. 
Naval petroleum 

reserve sales. 
Other 


Directly priced 

Directly priced 

Deflation: Proxy 
prices. 

Sum of detail 

Extrapolation 


3 mos DOE 


DOE 


2 mos. DOE 


3 mos. DOE 


3 mos. DOE. 


PPI's 


2 mos. PPI's 


3 mos. PPI's 


3 mos. PPI's. 


Services 


OPM employment 
(by grade and 
step) and average 
hours worked. 

National defense 

IPD's. 
Extrapolated by paid 

employee hours. 
CPI's/PPPs/AHE's 

Private-sector cost 
indexes/Federal 
Hiqhway Admin./ 


OPM employment 

National defense 

IPD's. 
Extrapolated by paid 

employee hours. 
2 mos. CPI's/PPI's/ 

AHE's. 

Private-sector cost 
indexes/Federal 
Highway Admin./ 


OPM employment 

National defense 

IPD's. 
Extrapolated by paid 

employee hours. 
3 mos. CPI's/PPI's/ 

AHE's. 

Private-sector costs 
indexes/Federal 
Highway Admin./ 




Compensation 


OPM employment. 


Other services . 


Sum of detail 

Deflation: Proxy 

prices. 
Deflation: Proxy 

prices. 
Deflation: Proxy 

prices. 

Deflation: Proxy 
prices. 


Travel and 

transportation. 
Financial services... 

Other 


National defense 

IPD's. 
Extrapolated by paid 

employee hours. 
3 mos. CPI's/PPI's/ 


Structures 


AHE's. 
Private-sector cost 




indexes/Federal 
Highway Admin./ 



• Less than $0.05 billion. 

1. The estimates for later revisions have the same sources. 



AHE Average hourly earnings of production workers. 

AMS Agricultural Marketing Sen/ice, U.S. Department of Agriculture. 

ASCS Agricultural Stabilization and Conservation Service, U.S. Department of 

Agriculture. 

CCDR Contract control documentation reports. 

CPI Consumer price index. 

CPR Construction project reports. 

DOE U.S. Department of Energy. 

ER Exchange rate. 

GSA GeneralServices Administration. 

ICS Inventory control system. 

IPD Implicit price deflator. 

MR U.S. Department of Defense manpower reports. 

MSC Military Sealift Command. 

MTMC Military Traffic Management Command. 

NASS National Agricultural Statistics Sen/ice, U.S. Department of Agriculture. 

OPM Office of Personnel Management. 

PCR Production control report. 

PPI Producer price index. 

PPR Petroleum products report. 

PRF Index & prices received by fafmors for crops. 

R&D Research and development. 



54 Government Transactions. 



Jslovember 1988 



is used primarily for new weapons systems, for which 
the effects of the progress curve of "old" and "new" are 
pronounced; the progress, or learning, curve depicts 
the high prices of a new system that are associated 
with low initial labor productivity and the subsequent 
rapid price decline as productivity increases. The over- 
lap pricing procedure uses the price of the new com- 
ponent at a point on the learning curve when price 
change due to learning does not influence the differ- 
ence in relative prices. (For example, it is assumed 
that learning has ceased to be a major influence by 
the 100th unit of fighter aircraft.) As the price for the 
old component, it uses a point from the last normal 
production run — that is, before production shutdown 
costs are a major influence on the price of the old com- 
ponent. The price change from the overlap point for 
the old component to the designated unit of the new 
component is then removed from the price of the new 
unit. The adjusted price for the new unit can then be 
linked to the overlap price for the old unit. Any dif- 
ference in price between the old and new components 
is a quality difference and is used to calculate the ad- 
justment factor as in a regular link. 

Two DOD sources of data are widely used in con- 
structing base-year prices and price indexes. CCDR's 
were described in the section on current dollars. The 
other is the inventory control system: 

• Inventory Control System (ICS): Data on quan- 
tities and prices of items purchased by govern- 
ment supply centers — that is, the organizations 
charged with centralized purchasing and supply- 
ing of goods needed by the civilian and mili- 
tary agencies — are available from several machine 
readable files [12]. For example, "Procurement 
History File" (J041) [12 A] provides quantities and 
prices for items purchased by the Air Force Logis- 
tics Command. Items in the ICS are coded by a 
13-digit National Stock Number (NSN), which— as 
a unique identifier for each item purchased by the 
Federal Government — is based on extremely de- 
tailed specifications. The data are quarterly and 
are generally available by the first July revision. 

Table II-9 shows the price indexes or extrapolators 
at the level of detail at which the constant-dollar esti- 
mates are prepared. The level of detail often reflects 
the DOD agency making the purchase as well as the 
type of good or service. 

Durable goods 

Aircraft. — Constant-dollar purchases of aircraft are 
prepared using two methods, both with DOD prices. 
Most are prepared by direct pricing; the others are 
prepared by deflation using indexes constructed from 
DOD prices. 

For the estimates that are directly priced, data on 
the average price paid for a component delivered dur- 
ing 1982 are from CCDR's [7]. This price is adjusted 
to reflect the cost (in 1982 dollars) of all configuration 



changes deemed to be quality changes. The adjust- 
ment, following the producer cost procedure, draws on 
information in the CCDR's on the cost of implementing 
an engineering change order (ECO), which is required 
for any configuration change to an aircraft system. 

For the estimates that are deflated (that is, for 
the current-dollar estimates prepared using the ra- 
tio method), data from the ICS are available for 
many other aircraft components and related equip- 
ment [12A, B]. The data are used to construct price 
indexes for purchases by military service. Because 
the specifications for a NSN, which is the code used 
in the ICS, are extremely detailed, adjustments to the 
base-year price are not needed for a given NSN; a link- 
ing procedure is used for NSN items that are not pur- 
chased in the base year but are purchased in at least 2 
other years. For the purchases for which ICS data are 
not available, IPD's derived from the directly priced 
estimates are used. 

For the advance quarterly estimates, quantities and 
prices (including estimates of ECO costs) for the di- 
rectly priced estimates are based largely on scheduled 
deliveries and prices from unpublished data underly- 
ing the budget [4B-2, -5, -15]. Data fi-om PCR's [18A, 
B, C, F, G] and CCDR's are incorporated in the esti- 
mates as they become available. The aircraft IPD'S 
derived from the directly priced estimates are used for 
the estimates that are deflated. 

Missiles. — Constant-dollar purchases of missiles 
are prepared using two methods, both with DOD 
prices. Most are prepared by direct pricing; the base- 
year price is constructed in the same way as for air- 
craft. The others are prepared by deflation using in- 
dexes constructed from DOD prices for missiles; the 
price indexes used are a combination of those con- 
structed, in the same way as for aircraft, from ICS 
data [12 A, B] and from IPD's derived from the directly 
priced estimates. 

For the advance quarterly estimates, quantities and 
prices (including estimates of ECO costs) for the di- 
rectly priced estimates are based largely on scheduled 
deliveries and prices from unpublished data underly- 
ing the budget [4B-3, -6, -12, -13]. Data from PCR's 
[18A, B, C, D] and CCDR's [7] are incorporated as they 
become available. The missiles IPD's derived from the 
directly priced estimates are used for the estimates 
that are deflated. 

Ships. — Constant-dollar purchases of ships are pre- 
pared using three methods. Estimates of a small part 
of government-furnished equipment are prepared by 
direct pricing; estimates of the rest of this equipment 
are prepared by deflation using seven PPI's [62]. Es- 
timates of ship construction and conversion (includ- 
ing the ships exported under the foreign military sales 
program) by private shipyards are prepared by defla- 
tion. The index is constructed using what is called 
the "frozen ship method." The design of a specific 
ship (usually the second ship) in a class — for example, 
the design of a nuclear submarine in the Los Angeles 



Government Transactions. 



J\Icrve'.vber 1988 55 



Table 11-9.— Methods Used In the Derivation of Constant-Dollar National Defense 

Purchases of Goods and Services 



Category 



Method for July revision 



1982 

weight 

(percent) 



Category 



Method for July revision 



1982 

weight 

(percent) 



National defense 
purchases. 



Durable goods . 



Military equipment., 



Aircraft 

Army new 

Army other 

Air Force new .. 
Air Force other. 

Navy new 

Navy other 



Missiles 

Army new 

Army other 

Air Force new . 



Air Force other... 
Air Force space . 
Air Force other 

programs. 
Navy new 



Navy other 

Marine Corps . 



Ships 

Private shipyards . 



Government-furnished 
ship equipment. 

Foreign military sales... 
Vehicles 



Army combat 

Army noncombat 

Air Force noncombat.... 

Navy noncombat 

Marine Corps combat. 
Marine Corps 
noncombat. 



Electronic equipment, 

Air Force 

Army, Navy, and 
Marine Corps. 



Other equipment . 



Army 

Air Force 

Army small arms 

Navy and Marine 

Corps small arms, j 
Other I Deflation by 13 PPI's 



IPD calculated from the 
detail below. 

IPD calculated from the 
detail below. 

IPD calculated from the 
detail below. 

IPD calculated from the 
detail below. 

Direct pricing 

Deflation; DOD prices ... 

Direct pricing 

Deflation: DOD prices ... 

Direct pricing 

Deflation: DOD prices ... 

Direct pricing 

Deflation: DOD prices .... 

Direct pricing 

Deflation: DOD prices ,.., 

Direct pricing 

Deflation: DOD prices 



IPD calculated from the 
detail below. 

Direct pricing 

Deflation: DOD prices ... 

Direct pricing 

Deflation: DOD prices ... 

Direct pricing 

Deflation: DOD prices ... 
Deflation: DOD prices ... 
Deflation: DOD prices ... 
Deflation: DOD prices ... 



Direct pricing 

Deflation: DOD prices 
Deflation: DOD prices 
Deflation: DOD prices 



IPD calculated from the 

detail below. 
Shipyard prices for "frozen 

snip". 
Direct pricing 



Deflation by 7 PPI's 

Deflation: Frozen ship IPD. 

IPD calculated from the 
detail below. 

Direct pricing 

Deflation: DOD prices 

Direct pricing 

Deflation: DOD prices 

Direct pricing 

Deflation: DOD prices 

Deflation: DOD prices 

Deflation: DOD prices 

Deflation: DOD prices 



IPD calculated from the 

detail below. 
Deflation: DOD prices ... 
Deflation by 4 PPI's 



IPD calculated from the 

detaii below. 

Deflation: DOD prices ... 

Deflation: DOD prices ... 

Deflation: DOD prices ... 

Deflation bv 1 PPI 



100.000 
25.371 
20.758 

8,663 

.248 

.128 

,007 

.289 

2.188 

.189 

.022 

2.824 

1.301 

.535 

.052 

.880 

2.923 

.306 
.162 
.001 
.145 
.234 
.199 
.118 
,270 
,606 

.474 
.338 
.057 
.013 

3.080 

1.914 

.103 

1.198 
-.135 

1.498 

.807 
.419 
.043 
.078 
.006 
.085 
.013 
.019 
.028 

1.596 

.330 
1 .266 

2.998 

.337 

1.321 

.118 

.096 

1.126 



Other durable goods 

Army stock fund 

Air Force stock fund 

Navy stock fund 

Defense stock fund 

General-purpose 

Other^ 

Nondurable goods 

Petroleum products 

Jet fuels 

Gasoline 

Diesel and heating oil.... 
Other fuels 

Ammunition 

Army 

Air Force 

Torpedoes 

Navy, except torpedoes 
Marine Corps 

Other nondurable goods.. 

Clothing and textiles 

Subsistence 

Other defense stock 

fund. 

Army stock fund 

Printing 

Military assistance 

program. 

Services 

Compensation of 
employees. 
Military 



Civilian. 



Other sen/ices. 



Contractual research 
and development. 

Department of 
Defense. 

Department of Energy , 

Installation support 

Utilities 

Electricity 

Natural gas 

Water and sewage... 

Steam and hot 
water. 
Communication 

Postage 

Local telephone 

Other 



IPD calculated from the 
detail below. 

Deflation: DOD prices 

Deflation: DOD prices 

Deflation: DOD prices 

Deflation: DOD prices 

BEA computer price index 

Deflation by 13 PPI's 

IPD calculated from the 
detail below. 

IPD calculated from the 
detail below. 

Direct pricing 

Direct pricing 

Direct pricing 

Deflation: DOD prices 

IPD calculated from the 
detail below. 

Deflation: DOD prices 

Deflation: DOD prices 

Direct pricing 

Deflation by 8 PPI's 

Deflation by 8 PPI's 

IPD calculated from the 
detail below. 

Deflation by 4 PPI's 

Deflation by 6 PPI's 

Deflation: DOD prices 

Deflation: DOD prices 

Deflation: DOD prices 

Deflation by 25 PPI's 

IPD calculated from the 
detail below. 

IPD calculated from the 
detail below. 

Base-year value extrapolated 
by active duty personnel 
by rank (10 for officers, 4 
for warrant officers, and 9 
for enlisted), by cadets, 
and by reserves. 

Deflation: DOD prices 

Base-year value extrapolated 
by employment by grade 
and step and by hours 
worked. 

IPD calculated from the 
detail below. 

IPD calculated from the 

detail below. 
Deflation: DOD and proxy 

prices. 
Deflation: DOD and proxy 

prices. 

IPD calculated from the 

detail below. 
IPD calculated from the 

detail belovi/. 
Deflation by 15 PPI's and 2 

ER's, 

Deflation by 1 CPl 

Deflation by 1 CPl and 3 

ER's. 
Deflation bv 1 CPl and 2 

ER's. 
IPD calculated from the 

detail below. 

Deflation by 20 PPI's 

Deflation by 1 PPi 

Deflation: DOD prices 



4.613 

.840 
,852 
,066 
.050 
.296 
2.510 

7,018 



4,749 

2,566 
202 

1.390 
.591 

1,190 

.631 
.235 
.191 
.091 
.042 

1.079 

.392 
.112 
.343 

.068 
.106 
.058 



65.592 

43,319 
28.389 



,814 
14,116 



22.273 

8.405 
7,127 
1,278 

6.202 

1.132 

,801 

,237 
073 

,021 

.754 

.104 
.378 
,272 



56 Government Transactions. 



JSIovember 1988 



Table 11-9.— Methods Used in the Derivation of Constant-Dollar National Defense 

Purchases of Goods and Services — Continued 



Category 


Method for July revision 


1982 

weight 

(percent) 


Category 


Method for July revision 


1982 

weight 

(percent) 


Other 


IPD calculated from the 

detail below. 
Deflation by 1 AHE and 1 ER . 
Deflation bv 1 AHE 


4.316 

.424 
.669 

1.365 

.163 

.263 

1.242 

.190 

2.835 

2.188 

.191 

.657 

1.340 

.647 

.335 
.098 
.119 
.095 

1.856 

.156 

.850 
.850 


Transportation of 
materiel. 
Air 


IPD calculated from the 

detail below. 
Deflation: DOD prices 


1.651 


Housekeeolna 


.076 


Equipment 
mAJntpnancp 


Sea 


Deflation: DOD prices 


.540 


Deflation: DOD prices and 3 

ER's. 
Deflation by 1 AHE 


Rail 


Deflation: DOD prices 


.101 


Property 

maintpnancp 


Truck 


Deflation' DOD prices 


897 


Terminal services 

Travel of persons 


Deflation: DOD prices 


037 


Rental of property 

Leased equipment .... 
Contractor-operated 
facilities. 

Othor 


IPD calculated from the 

detail below. 
Deflation: DOD prices 




Dpflation bv 1 AHF 


1.348 


Deflation by 7 AHE's 


Air 




Deflation by 5 AHE's and 1 
ER. 

IPD calculated from the 

detail below. 
IPD calculated from the 

detail below. 
Deflation: DOD prices 


.628 


Bus and rail 


Deflation: DOD prices 


.031 


Weapons support 


Reimbursable travel 

Other^ 


Deflation: DOD, OPM, and 
proxy prices. 

Deflation by 1 AHE 


.689 




-.024 


Depot maintenance 


Structures 


IPD calculated from the 
detail below. 

IPD calculated from the 

detail below. 
Direct pricing 


2 019 


Army 


Militarv facilities 




Air Force 


Deflation by 4 AHE's 


1 209 


Navy 


Deflation: DOD prices 


Domestic new 
construction. 
Other 




Procurement services... 


IPD calculated from the 

cietail below. 
Deflation by 2 AHE's 


.298 


Aircraft 


Deflation: DOD prices and 3 
ER's. 

IPD calculated from the 

detail below. 
Deflation by Census Bureau 

index tor one-family 

houses sold and 3 ER's. 
Deflation by a composite of 3 

construction cost indexes. 
Deflation: IPD for new 

nonresidential construction. 


911 


Missiles 


Deflation by 2 AHE's 


Other structures 




Navy ships 


Deflation by 2 AHE's 




Armv weaoons 


Deflation bv 2 AHE's 


.810 


Personnel support 


IPD calculated from the 

detail below. 
Deflation: DOD prices 


Familv housina 


467 


Training and 
education. 


Nuclear facilities 




Deflation by 1 AHE 


.344 


Consultina . . . 


Net purchases of used 
structures. 




Foreign nationals 


Deflation: DOD prices and 
10 ER's. 


-001 







1. The estimates for later revisions have the same sources. 

2. Other durable goods and other services include purchases under the military assistance pro- 
gram. 

Note. — Weights may not sum to category totals because of rounding. A list of the price indexes 
used is available upon request from BEA. 



AHE Average hourly earnings. 

CPI Consumer price index. 

DOE U.S. Department of Energy. 

ER Exchange rate. 

GSA General Services Administration. 

IPD Implicit price deflator. 

OPM Office of Personnel Management. 

PPI Producer price index. 



Government Transactions. 



Jslovember 1988 



57 



class — is frozen. A shipyard that has produced this 
class of ship is then asked to re-price the design us- 
ing the current-period wage structure and technology. 
Any change in the price calculated for the ship is a 
price change. These estimates are used to construct 
a price index. Currently, five frozen ships are in the 
sample. 

For the advance quarterly estimates, quantities 
and prices (including estimates of ECO costs) for the 
directly priced government-furnished equipment are 
based largely on scheduled deliveries and prices from 
unpublished data underlying the budget [4B-16]. Data 
from PCR's [18E] and CCDR's [7] are incorporated 
as they become available. Two months of PPI's are 
available for the other government-furnished equip- 
ment; the third month is available for the preliminary 
estimate. For the part that is estimated using the 
frozen ship method, all current quarterly estimates of 
prices are judgmental extrapolations or, when avail- 
able, based on shipyard prices. 

The current-dollar estimates of foreign military 
sales are deflated using the IPD calculated using the 
frozen ship method. 

Vehicles. — Constant-dollar purchases of vehicles 
are prepared using two methods, both with DOD 
prices. Most are prepared by direct pricing; the base- 
year price is constructed in the same way as for air- 
craft. The others are prepared by deflation using in- 
dexes constructed from DOD prices; the price indexes 
used are a combination of those constructed, in the 
same way as for aircraft, from ICS data [12A, B, C] 
and from IPD's derived from the directly priced esti- 
mates. 

For the advance quarterly estimates, quantities and 
prices (including estimates of ECO costs) for the di- 
rectly priced estimates are based largely on scheduled 
deliveries and prices from unpublished data underly- 
ing the budget [4B-7, -8, -9, -10, -11]. Data from PCR's 
[18C] and CCDR's [7] are incorporated as they become 
available. The vehicles IPD's derived from the directly 
priced indexes are used for the estimates that are de- 
flated. 

Electronic equipment. — Constant-dollar pur- 
chases of electronic equipment are prepared by de- 
flation. Some are deflated using indexes constructed 
from DOD prices available in the ICS [12A, B]; most 
are deflated using four PPI's [62]. 

For the current quarterly estimates, all pvirchases 
of electronic equipment are deflated using four PPI's. 
Two months of PPI's are available for the advance esti- 
mate; the third month is available for the preliminary 
estimate. 

Other equipment. — Constant-dollar purchases of 
other equipment, such as training equipment, are pre- 
pared by deflation. Some are deflated using indexes 
constructed from DOD prices in the ICS [12A, B]; the 
rest are deflated using 14 PPI's [62]. 



For the current quarterly estimates, all purchases 
of other equipment are deflated using 14 PPI's. Two 
months of PPI's are available for the advance estimate; 
the third month is available for the preliminary esti- 
mate. 

Other durable goods. — Constant-dollar purchases 
of other durable goods are prepared by deflation. 
Some-i- are deflated using indexes constructed from 
DOD prices from the ICS [12A, B, D]. Over one-half are 
deflated using 13 PPI's [62]. Finally, general-purpose 
computers are deflated using the BEA computer price 
index [43, 45]. 

For the current quarterly estimates, all purchases 
of other durable goods except computers are deflated 
using 13 PPI's. Two months of PPI's are available for 
the advance estimate; the third month is available for 
the preliminary estimate. For computers, the BEA 
computer price index is used. 

Nondurable goods 

Petroleum products. — Constant-dollar purchases 
of petroleum are prepared using two methods. Most 
are prepared by direct pricing; the prices, as well as 
the quantities, are from monthly petroleum product 
reports (PPR's) [17], which use the NSN codes. The 
others are prepared by deflation using indexes con- 
structed from DOD prices — specifically, the combined 
IPD derived from the directly priced estimates. 

For the advance quarterly estimates, quantities and 
prices for the estimates that are directly priced are 
judgmental or, when available, from PPR's. PPR's are 
available for the preliminary estimate. The combined 
petroleum IPD derived from the directly priced esti- 
mates is used for the estimates that are deflated. 

Ammunition. — Constant-dollar piarchases of am- 
munition are prepared using two methods. A small 
portion are prepared by direct pricing; the base-year 
price is constructed in the same way as for aircraft. 
Most are prepared by deflation using indexes con- 
structed from DOD prices, in the same way as for air- 
craft, from ICS data [12A, B]. The rest are deflated 
using eight PPI's [62]. 

For the advance quarterly estimates, quantities and 
prices (including estimates of ECO costs) for the di- 
rectly priced estimates are based largely on scheduled 
deliveries and prices from iinpublished data underly- 
ing the budget [4B-14]. Data from CCDR's [7] are 
incorporated as they become available. For the es- 
timates that are deflated, eight PPI's are used. Two 
months of PPI's are available for the advance estimate; 
the third month is available for the preliminary esti- 
mate. 

Other nondurable goods. — Constant-dollar pur- 
chases of other nondurable goods are prepared by de- 
flation. A substantial portion are deflated using in- 
dexes constructed from DOD prices available in the 
ICS [12A, B, D, E]; the rest are deflated using four 
PPI's for clothing and textiles and six PPI's for subsis- 
tence (mostly food) [62]. 



58 Government Transactions. 



IJovember 1988 



For the current quarterly estimates, all purchases of 
other nondurable goods are deflated using PPI's. Two 
months of PPI's are available for the advance estimate; 
the third month is available for the preliminary esti- 
mate. 

As explained in describing current-dollar purchases, 
the source data include goods pui'chased and given to 
foreign countries under foreign assistance programs. 
The current-dollar estimates are deflated using 25 
PPI's, reflecting the wide range of these goods. 

Compensation of employees 

Except for one type of pay, constant-dollar estimates 
of the compensation of employees are prepared by ex- 
trapolating base-year compensation by an index of em- 
ployment or by an index of employee hours. The ex- 
trapolators are adjusted, to the extent possible, for 
changes in experience and education — that is, in the 
quality of the workforce. This procedure is designed 
to approximate specification pricing for output by gen- 
eral government employees. It assumes that, for a 
given type of employee, output per hour worked does 
not change over time and that productivity changes 
occur for the workforce only because of changes in the 
mix of employees with respect to their level of experi- 
ence and education. The constant-dollar estimates for 
a small part of military compensation are prepared by 
deflation using pay rates. 

Military compensation. — ^The constant-dollar esti- 
mates of military compensation are derived using ex- 
trapolation and deflation methods. Extrapolation is 
used for the types of compensation that are based on 
rank or length of service, such as basic pay, or are 
based on a percentage of pay, such as reenlistment 
bonuses. Deflation is used for special pays, such as 
flight pay and dentist pay, that are paid to military 
personnel who meet special requirements and train- 
ing. 

As mentioned, in the extrapolation method the qual- 
ity of a unit of labor purchased is defined in terms of 
education and experience. Changes in these character- 
istics are treated as quality changes; all other changes 
are price changes. For the military pay system, rank 
and length of service are assumed to represent the ed- 
ucation and experience criteria. Twenty-three ranks — 
10 for officers, 4 for warrant officers, and 9 for en- 
listed personnel — and cadets are identified [13B, C, 
F, G]. The 1982 compensation (excluding the special 
pays) per employee for a given rank and length of ser- 
vice is the base-year price. Employment by rank and 
length of service for the current period is multiplied 
by this base-year price to obtain this part of constant- 
dollar military compensation. The difference between 
the constant-dollar average salary in a given year and 
the base-year average salary represents the shift in 
the composition of employment with respect to educa- 
tional attainment and experience. 

Special pays represent a higher level of educational 
attainment and experience. Any change in the spe- 



cial pay rate, therefore, is a price change. Information 
on changes in special pays is available fi^om the mil- 
itary compensation report [13A, D]. A price index is 
constructed for each of the special pays and is used to 
deflate the current-period expenditures for these pays. 
For the advance quarterly estimates, 2 months of 
employment data are available from DOD manpower 
reports [13E] for the extrapolation method; the third 
month is available for the preliminary estimate. 

Civilian compensation. — The constant-dollar es- 
timates of civilian employee compensation are derived 
by extrapolation and then divided between national 
defense and nondefense purchases in proportion to 
employment. The basic unit of purchase — and the 
extrapolator — is an hour worked; an hour paid is not 
used because it would reflect changes in holidays and 
annual leave usage as well as hours worked; the for- 
mer are considered to be price changes. The quality 
of an hour worked is defined in terms of the education 
and experience of the employee. Changes in educa- 
tional attainment and experience are considered qual- 
ity changes; all other changes are price changes. 

There are several different Federal civilian pay 
plans — ^for example, General Schedule and the Wage 
Grade. All are based on skill level (grade) and length 
of service (step), which are assumed to represent the 
education and experience criteria. Average 1982 com- 
pensation per hour worked (within a pay plan) for each 
grade is the base-year price. 

Employment data by grade and step for each pay 
plan for civilian personnel are available from 0PM 
[13H, J], generally by the first July revision, and are 
adjusted to reflect changes in the index of average 
hours worked. These data are multiplied by the base- 
year price to obtain constant-dollar civilian compensa- 
tion. 

For the advance quarterly estimates, the change 
in total civilian employment is used to estimate the 
change in constant-dollar compensation. 

Other services 

Contractual research and development. — 

Constant-dollar purchases of contractual research and 
development (R&D) are prepared by deflation. An in- 
dex of input costs from a sample of companies doing 
R&D for DOD and Department of Energy (DOE) is con- 
structed using weights from the BEA sample of R&D 
contractors data. The sample of 25 contractors, se- 
lected on a probability basis, report quarterly on the 
cost of three R&D inputs: Direct labor, direct mate- 
rial, and indirect costs. The price of direct labor is 
represented by the hourly wage rate, by standard job 
classification title (for example, supe-visory electronic 
engineer), of employees engaged in R&D. The price of 
direct material is represented by a sample of PPI's [62] 
selected in consultation with each participating com- 
pany. These two indexes are weighted together (with 
1982 weights) to calculate a price index for direct costs. 
A price index for indirect costs is constructed as the 



Government Transactions. 



^November 1988 59 



product of the price index of direct costs and an index 
of the indirect cost rate (the negotiated rate of over- 
head costs). In turn, the indexes of the prices of direct 
and indirect costs are combined (with 1982 weights) to 
construct the price index for a company. 

For the advance quarterly estimate, 2 months of 
PPI's are available for the parts of the index based 
on those indexes; judgment is used for the rest. Con- 
tractor information and the third month of PPI's are 
available for the preliminary estimate. 

Installation support. — Constant-dollar purchases 
of installation support services are prepared by de- 
flation. Some are deflated using indexes constructed 
from DOD contract information [5A, F, G], some using 
PPI's or CPI's [62, 59], and some using average hourly 
earnings [60]. For services purchased overseas, ad- 
justments are made for the exchange rate [10] between 
the U.S. dollar and currencies of countries where sub- 
stantial purchases are made (usually Germany, Japan, 
South Korea, and the United Kingdom). 

For communication other than postage and local 
telephone and for property maintenance, information 
from DOD contracts provides the basis for construct- 
ing price indexes [47, 48]. The costs of implement- 
ing changes in the contracts' detailed work statements 
that are deemed to be quality changes are used to ad- 
just the price indexes derived from changes in contract 
value. 

For the utility categories, postage, and local tele- 
phone service, PPI's and CPI's [62 and 59, respec- 
tively] are used. 

For the remaining six categories, price indexes are 
constructed on the basis of average hourly earnings 
of production workers in related industries [60]. For 
example, the price index used to deflate housekeeping 
services is constructed from the average hourly earn- 
ings for workers providing services to buildings on the 
assumption that the price of these services moves like 
the wage of the employees performing the work. 

For the advance quarterly estimate, contract infor- 
mation and 2 months of PPI's, CPI's, average hourly 
earnings, and exchange rates are available. The third 
month is available for the preliminary estimate. 

Weapons support. — Constant-dollar purchases of 
weapons support services are prepared by deflation. 
Some are deflated using indexes constructed from 
DOD contract information and some using average 
hourly earnings [60]. 

For the advance quarterly estimate, contract infor- 
mation and 2 months of average hourly earnings are 
available; the third month is available for the prelim- 
inary estimate. 

Personnel support. — Constant-dollar purchases of 
personnel support services are prepared by deflation. 
Training and education is deflated using a sample of 
tuition prices paid by DOD, and consulting is deflated 
using average hourly earnings [60]. For the services of 
foreign nationals, wage rates paid by DOD [16, 21] are 



adjusted for the exchange rate [10] between the U.S. 
dollar and currencies of countries where substantial 
purchases are made. 

For the advance quarterly estimate, contract infor- 
mation and 2 months of average hourly earnings are 
available; the third month is available for the prelimi- 
nary estimate. For the services of foreign nationals, 
the current quarterly estimates are judgmental ex- 
trapolations. 

Transportation of materiel. — Constant-dollar 
purchases of services for the transportation of materiel 
are prepared by deflation using indexes constructed 
from DOD prices available in reports from the Mili- 
tary Sealift Command [66, 67, 68, 69, 70, 71] and Mil- 
itary Traffic Management Command [30, 31, 32, 34, 
35]. Samples of trips from each of four categories — 
air, sea, rail, and truck — and of terminal sei-vices are 
priced each quarter to construct price indexes for each 
category. This information is available for the advance 
quarterly estimate. 

Travel of persons. — Constant-dollar purchases of 
services for the travel of persons are prepared by de- 
flation. Indexes constructed from DOD prices avail- 
able in reports from the Military Traffic Management 
Command, the Military Airlift Command, and a trade 
source are used to deflate air travel and travel by bus 
and rail [11, 28, 29, 33]. These indexes are constructed 
using a sample of trips from the two categories that 
is priced each quarter. Indexes constructed from in- 
formation from the General Services Administration 
on reimbursement rates for per diem, dislocation al- 
lowances, and mileage for privately owned vehicles 
[87] and from CPI's for taxi fares and car rental fees 
[59] are used to deflate reimbursable travel expenses. 
With the exception of the CPI's, for which 2 months 
of data are available, this information is available for 
the advance quarterly estimate; the third month of the 
CPI's is available for the preliminary estimate. 

Other services. — Constant-dollar purchases of 
other services are prepared by deflation with an in- 
dex constructed from average hourly earnings in the 
miscellaneous services industry [60]. For the advance 
quarterly estimate, 2 months of average hourly earn- 
ings data are available; the third month is available 
for the preliminary estimate. 

Structures 

Military facilities. — Constant-dollar purchases of 
military facilities are prepared using two methods. 
The estimate of domestic new construction is prepared 
by direct pricing; the rest is prepared by deflation us- 
ing the combined IPD derived from the directly priced 
estimates. For facilities that are constructed over- 
seas, adjustments are made for the exchange rate [10] 
between the U.S. dollar and currencies of countries 
where substantial construction takes place (usually 
Germany, Japan, and South Korea). 

The estimates that are directly priced use the num- 
ber of square feet constructed (or other physical unit 



60 Government Transactions. 



^November 1988 



measure) and the base-year cost per square foot, by 
detailed DOD construction category, derived from in- 
foiTnation contained in construction project reports 
(CPR's) [5]. The categories are set up on the basis of 
end use and other characteristics that serve as pricing 
specifications. The cost per square foot is adjusted to 
reflect the cost (in 1982 dollars) of any changes in the 
specification of the construction category. (For more 
detail, see "Implicit Price Deflators for Military Con- 
struction" [42].) 

For the current quarter, the estimates that are di- 
rectly priced are prepared in two parts: For new 
projects, the number of square feet constructed and 
prices are judgmental; for ongoing projects, the num- 
ber of square feet constructed and prices are from 
CPR's [5]. The military facilities IPD derived from 
the directly priced estimates is used for the estimates 
that are deflated. Two months of exchange rates are 
available for the advance estimate; the third month is 
available for the preliminary estimate. 

Other. — Constant-dollar purchases of two cate- 
gories of other structures are prepared by deflation. 
The price indexes used for new construction are from 
Current Construction Reports [37]. These indexes in- 
clude the Turner Construction Company building cost 
index, the Federal Highway Administration compos- 
ite highway construction index, and the Bureau of the 
Census index for one-family houses sold. The indexes 
are smoothed by a three-quarter moving average or 
are seasonally adjusted using the Census X-11 proce- 
dure. (Prior to 1985, the Census Bureau index was 
used with seasonal adjustment.) The availability of 
the price data varies for each index, and BEA pre- 
pares judgmental estimates to supplement the avail- 
able data. 

Family housing is deflated using a three-quarter 
moving average of the Census Bureau index for new 
one-family houses sold (excluding lot) adjusted for ex- 
change rates [10]. DOE construction of nuclear facil- 
ities is deflated using a composite index consisting of 
the Census Bureau index for one-family houses sold, 
the Turner Construction Company building cost in- 
dex, and the Federal Highway Administration high- 
way structures construction index (a component of the 
composite). 

Net purchases of used structures are deflated using 
the IPD for new nonresidential structures; these es- 
timates are prepared along with other components of 
gross private domestic fixed investment. For facilities 
that are constructed overseas, adjustments are made 
for the exchange rate between the U.S. dollar and 
currencies of countries where substantial construction 
takes place. 

For the current quarterly estimates of other struc- 
tures, the advance estimate is based on the follow- 
ing data: 2 months of the Census Bureau index for 
new one-family houses sold, a quarterly estimate of 
the Turner Construction Company building cost in- 
dex and of the Federal Highway Administration high- 



way structures construction index, and 2 months of 
exchange rates. For the monthly measures, 3 months 
of data are available for the preliminary estimate. 

Nondefense purchases 

As previously discussed, current-dollar nondefense 
purchases are derived in two pieces: CCC inventory 
change and all other purchases. All other purchases 
are then classified by type of purchase — durable goods, 
nondurable goods, compensation, other services, and 
structures. Compensation is derived from total Fed- 
eral civilian compensation as described in the na- 
tional defense section. Purchases of structures are 
from the Census Bureau Current Construction Re- 
ports [37]. The remaining purchases are allocated to 
durable goods, to nondurable goods except CCC, and 
to other services based on annual estimates of expen- 
ditures by object class from the Treasury Bulletin [78], 
the MTS [77], the Budget Appendix [4A-2], contract 
awards [6C], and other agency reports [12E, 14, 25, 
39, 52, 54, 55]. Quarterly current-dollar estimates of 
this group are interpolations without an indicator and, 
for the current estimates, judgmental extrapolations. 

As indicated earlier, table II-8 indicates which 
of the three methods of preparing constant-dollar 
estimates — deflation, extrapolation, or direct pricing — 
is used for the components and provides an overview of 
the source data. Table 11-10 shows in detail the price 
indexes or extrapolators used to derive constant-dollar 
estimates. The expenditures by object class discussed 
above are used to weight the price indexes.^ 

Durable goods 

Constant-dollar purchases of durable goods are de- 
rived by deflation. Data on prices paid by the Veterans' 
Administration (VA) for equipment and supplies are 
available from inventory control systems (ICS) [12E]. 
ICS data from the VA are used as they become avail- 
able, generally by the first July revision. The BEA 
price index is used for computers [43, 45]. PPI's are 
used for all other durable goods [62]. For the ad- 
vance quarterly estimate, all price indexes — except for 
computers — are based on 2 months of PPI's. Three 
months of PPI's are available for the preliminary esti- 
mate. 

Nondurable goods 

Constant-dollar CCC inventory change is derived 
using a procedure that parallels the current-dollar es- 
timating procedure described earlier. For each agri- 
cultural commodity where the not seasonally adjusted 
estimates are the product of a quantity and a mar- 
ket price, the constant-dollar not seasonally adjusted 
estimate is the product of the same quantity and 
the 1982 average market price from Department of 
Agriculture (USDA) data [22, 26]. Other agricultural 
commodities — and the accounting adjustments — are 



9. The current-dollar estimates of nondefense purchases by type for the 
relevant year are used in BEA's benchmark input-output tables. 



Government Transactions. 



J-Jovember 1988 



61 



Table 11-10. — Price Indexes Used in the Derivation of Constant-Dollar Federal Government Nondefense 

Purchases of Goods and Services 



Category 



Price index or extrapolator for July revision 



1982 

weight 

(Percent) 



Nondefense purchases 

Durable goods 

Computer equipment 

Aircraft 

Aircraft components 

Tractors 

Motor vetiicles 

Motor vefiicle parts 

Internal combustion engines 

Diesel engines 

Machine shop products 

Tires and tubes 

Mechanical power transmission equipment 

Ball and roller bearings 

Metalworking machinery and equipment 

Special industry machinery and equipment 

Construction machinery and equipment 

Industrial material handling equipment 

Refrigeration equipment 

Pumps, compressors, and equipment 

Heating equipment 

Hand and edge tools 

Precision measuring tools 

Hardware 

Structural, architectural, and pre-engineering metal products 

Communications equipment 

Radio receivers 

Television receivers 

Fans and blowers 

Metal valves 

Pipe fittings and flanges 

Electncal machinery and equipment 

Motors, generators, motor generator sets 

Electric lamps, bulbs, and parts 

Medical, surgical, and personal aid devices 

Medical equipment 

Scientific and engineering instruments 

Optical instruments and lenses 

Electronic components 

Photographic equipment 

Household furniture 

Commercial furniture 

Cooking equipment 

Utensils 

Tableware, kitchenware, and other pottery 

Calculating and accounting machines 

Office machines 

Nonferrous metals 

Iron and steel 

Miscellaneous metal products 

Miscellaneous products 

Sales of timber 



IPD calculated from detail below 

IPD calculated from detail below 

BEA computer price index 

PPI for civilian aircraft 

Index of AHE for aircraft and parts industry 

PPI tor tractors, other than farm 

PPI for motor vehicles 

PPI for motor vehicle parts 

PPI for internal combustion engines 

PPI for diesel, semidiesel, and dual fuel, nonauto internal combustion 
engines. 

PPI for machine shop products 

PPI for tires, tubes, tread and repair materials 

PPI for mechanical power transmission equipment 

PPI for ball and roller bearings 

PPI for metalworking machinery and equipment 

PPI for special industry machinery and equipment 

PPI for construction machinery and equipment 

PPI for industrial material handling equipment 

PPI for refrigeration equipment 

PPI for pumps, compressors, and equipment 

PPI for heating equipment 

PPI for hand and edge tools 

PPI for precision measuring tools 

PPI for hardware 

PPI for structural, architectural, pre-engineering metal products 

PDE IPD for communications equipment 

PPI for radio receivers 

PPI for television receivers 

PPI for fans and blowers, except portable 

PPI for metal valves, except fluid power 

PPI for metal pipe fittings, flanges, and unions 

PPI for electrical machinery and equipment 

PPI for motors, generators, and motor generator sets 

PPI for electric lamps, bulbs, and parts 

PPI for medical, surgical, and personal aid devices 

IPD calculated from VA data 

PDE IPD for scientific and engineering instruments 

Index of AHE for optical instruments and lenses industry 

PPI for electronic components and accessories 

PPI for photographic equipment and supplies 

PPI for household furniture 

PPI for commercial furniture 

PPI for cooking equipment 

PPI for household flatware 

PPI for tableware, kitchenware, and other pottery 

PPI for calculating and accounting machines 

PPI for office and store machines 

PPI for nonferrous metals 

PPI for iron and steel 

PPI for miscellaneous metal products 

PPI for miscellaneous products 

PPI for lumber 



100.000 

3.899 

.792 
.055 
.015 
.006 
.314 
.069 
.001 
.034 

.008 
.014 
.013 
.007 
.054 
.200 
.020 
.034 
,030 
.018 
.010 
.098 
.005 
.023 
.019 
.800 
.005 
.005 
.002 
.013 
.004 
.194 
.078 
.036 
.021 
.104 
.438 
.032 
.018 
.140 
.078 
.271 
.001 
.001 
.035 
.001 
.241 
.009 
.012 
.006 
.032 
-.517 



62 



Government Transactions. 



^November 1988 



Table 11-10.— Price Indexes Used in the Derivation of Constant-Dollar Federal Governmen; Nondefense 

Purchases of Goods and Services— Continued 



Category 



Price index or extrapolator for July revision 



1982 

weight 

(Percent) 



Nondurable goods 

Commodity Credit Corporation (CCC) inventory change 

CCC donations 

Strategic petroleum reserve 

Naval petroleum reserve 

Petroleum products 

Paper 

Printed materials 

Small arms ammunition 

Containers and packaging 

Plywood 

Other nonmetallic minerals 

Medical supplies 

Other agricultural chemicals 

Office supplies and accessories 

Soap and synthetic detergents 

Miscellaneous chemical products and preparations 

Luggage and small leather goods 

Sanitary papers and health products 

Mixed fertilizers 

Processed foods and feeds 

Refractories 

Apparel findings 

Services 

Compensation of employees 

Civilian compensation 

Coast Guard compensation 

Other services 

Travel 

Air transportation of things 

Rail transportation of things 

Sea transportation of things 

Truck transportation of things 

Parcel post service 

Rental sen/ices 

Communications services 

Water, sewerage, and sanitation services 

Electricity 

Electrical repair services 

Other repair services 

Business services 

Sen/ices to aircraft and aerospace equipment 

Ship services 

Other communications services 

Real estate services 

Engineering and architectural services 

Painting and decorating services 

Other trade contractors sen/ices 

Highway services 

Equipment inputs purchased for other services 

Equipment inputs purchased for modification and maintenance 
of equipment services. 

Imputed financial services 



IPD calculated from detail below 

For most commodities, market prices from Agricultural Prices and 
Dairy Market Statistics: Annual Summary. For other crops, prices 
received by farmers from USDA data. 

Composite index of prices received by farmers 

DOE prices 

DOE prices 

Composite index of PPI's for middle distillates, gasoline, and residual 
fuels. 

PPI for paper 

Index or AHE for commercial printing industry 

PPI for small arms and ammunition 

PPI for other miscellaneous metal products 

PPI for plywood 

PPI for other nonmetallic minerals 

IPD calculated from VA data 

PPI for other agricultural chemicals 

PPI for office supplies and accessories 

PPI for soap and synthetic detergents 

PPI for miscellaneous chemical products and preparations 

PPI for luggage and small leather goods 

PPI for sanitary papers and health products 

PPI for mixed fertilizers 

PPI for processed foods and feeds 

PPI for refractories 

PPI for buttons, button blanks, and parts 

IPD calculated from detail below 



IPD calculated from detail below 

Base-year value extrapolated by employment (by grade and step) and 

by hours worked. 
Base-year value extrapolated by employment (by grade and step) and 

by hours worked. 

IPD calculated from detail below 

National defense purchases IPD for travel of persons 

National defense purchases IPD for air transportation 

National defense purchases IPD for rail transportation 

National defense purchases IPD for sea transportation 

National defense purchases IPD for truck transportation 

IPD for parcel post service 

CPI for residential rent 

CPI for telephone services 

CPI for water, sewerage and sanitation services 

PPI tor electric power 

Index of AHE tor electrical repair shops industry 

Index of AHE for miscellaneous repair services industry 

Index of AHE for miscellaneous business services industry 

Index of AHE for aircraft and parts industry 

Index of AHE for ship and boat building and repairing industry 

Index of AHE for communications services industry 

Index of AHE for real estate operators and lessors industry 

Index of AHE for engineering and architectural services industry 

Index of AHE for painting, paper hanging, and decorating industry 

Index of AHE for special trade contractors industry 

Index of AHE for highway and street construction industry 

IPD for nondefense durable goods less timber sales and computer 

equipment). 
Composite index of PDE IPD's for aircraft, for ships and boats, and for 

communications equipdiwui, and PPI's for photographic equipment 

and supplies and for construction machinery and equipment. 
Base-year value extrapolated by paid employee hours of relevant 

financial institutions. 



18.845 
1 1 .629 



.899 

2.759 

-2.065 

.642 

.220 
.594 
.001 
.421 
.099 
.137 
.053 
.251 
1.602 
.533 
.501 
.160 

.265 
.014 
.006 
.094 
.030 

68.842 

41.914 
40.546 

1.368 

26.928 
1.080 
.041 
.072 
.027 
.188 
.014 
.702 
.814 
.056 
534 
.228 
.162 
.108 
.513 
.324 
.060 
.088 

1 1 .635 

.169 

2.013 

.144 

1.999 



1. 



1.417 



.540 



See footnotes at end of table. 



Government Transactions^ 



J^Iovember 1988 



63 



Table 11-10. — Price Indexes Used in the Derivation of Constant-Dollar Federal Government Nondefense 

Purchases of Goods and Services — Continued 



Category 


Price index or extrapolator for July revision • 


1982 

weight 

(Percent) 


Structures 


IPD calculated from detail below 


8.415 


New construction out-in-olace 


IPD calculated from detail below 


8.485 


Industrial buildings 


Average of Turner Construction Company building cost index, Bureau 
of the Census price index of new one-family houses sold (excluding 
lot), and Federal Highway Administration highway structures 
construction index. 

Average of Turner Construction Company building cost index and 
Bureau of the Census price index of new one-family houses sold 
(excluding lot). 

Turner Construction Company building cost index 


1.142 


Education buildings 

Hospitals and health facilities 


.028 
519 


Other buildings 

Highways and streets 


Average of Turner Construction Company building cost index and 
Bureau of the Census price index of new one-family houses sold 
(excluding lot). 

Federal Highway Administration composite highway construction index.. 

Bureau of Reclamation composite construction cost index 


.661 
.657 


Conservation and development of resources 


5.222 


Coast Guard construction 


Composite of Turner Construction Company building cost index, 
Bureau of the Census price index of new one-family houses sold 
(excluding lot), and Federal Highway Administration composite 
highway construction index. 

Average of the Bureau of Reclamation composite construction cost 
index and Highway Administration composite highway construction 
index. 

IPD for purchases of new private nonresidential structures 


028 


Miscellaneous nonbuilding construction 


.228 


Net purchases of existing nonresidential structures 


-.024 


Net purchases of existing residential nonfarm structures 


IPD for purchases of new private residential nonfarm structures 


.066 


Government force-account construction compensation 


Bureau of Reclamation composite construction cost trends index 


-.112 









1. The estimates for later revisions use the same indexes or extrapolators . 
Note. — Weights rray not sum to category totals because of rounding. 



AHE Average hourly earnings. 

CPI Consumer price index. 

DOE U.S. Department of Energy. 

IPD Implicit phce deflator. 

PDE Producers' durable equipment. 

PPI Producer price index. 

USDA U.S. Department of Agriculture. 

VA Veterans' Administration. 



64 Government Transactions. 



JSlovember 1988 



deflated by a price index for average prices received 
by farmers [26]. Seasonally adjusted estimates are 
derived in the same manner as for the current-dollar 
series. 

For the advance quarterly estimates of CCC pur- 
chases, 1 month of USDA price data is available for 
the directly priced estimates and 2 months of prices 
received by farmers are available for the deflated esti- 
mates. Additional price data become available for the 
preliminary and final estimates. 

Constant-dollar purchases of other nondurables are 
derived using a directly priced method and deflation. 
The directly priced method is used with prices and 
quantities from DOE for purchases of petroleum for 
the strategic petroleum reserve [55] and for sales from 
the naval petroleum reserve [54]. PPI's are used for 
most other nondurable goods [62]. For the advance 
quarterly estimates, 2 months of DOE prices and PPI's 
are available; 3 months of data are available for the 
preliminary and final estimates. 

Compens ation 

Constant-dollar purchases of Federal civilian com- 
pensation are derived by extrapolation using hours 
worked and base-period compensation. The final re- 
sult is split between defense and nondefense in pro- 
portion to employment. This procedure is described in 
the constant-dollar compensation section of national 
defense piirchases. Constant-dollar compensation of 
Coast Guard personnel is derived in the same man- 
ner as military personnel and added to the estimate 
for civilian nondefense personnel to yield total nonde- 
fense purchases of compensation in constant dollars. 

Other services 

Constant-dollar purchases of other services, except 
imputed financial services, are derived by deflation. 
Constant-dollar estimates of the services rendered 
without payment to the Federal Government by de- 



pository institutions are prepared by extrapolating the 
base-year value using BEA estimates of the paid em- 
ployee hours in commercial banks and Federal Reserve 
banks, based on BLS tabulations of employment and 
wages [1, 60, 61]. 

The IPD's for some defense purchases are used for 
nondefense purchases. For example, per diem rates 
and air fares are the same for all civilian employees; 
therefore, the IPD for defense travel of persons is di- 
rectly applicable to nondefense purchases of travel of 
persons. Defense IPD's for transportation by mode are 
also used. CPI's and PPI's are used for some pur- 
chases, such as telephone service and electric power 
[59, 62]. For many purchased services, such as main- 
tenance services and engineering services, price in- 
dexes are not available. An index is estimated us- 
ing a combination of average hourly earnings [60] and 
equipment IPD's to represent the labor and capital in- 
puts to the services being purchased. 

For the current quarterly estimates, the estimates 
of imputed financial services are judgmental extrap- 
olations. For the other services, 2 months of price 
data are available for the advance estimates; the third 
month of data is available for the preliminary esti- 
mates. 

Structures 

Constant-dollar purchases of structures are derived 
by deflation. The indexes used are the same as those 
described for other national defense structures (see 
page 60). Net purchases of existing structures are 
deflated using BEA's IPD's for new private nonfarm 
residential structures and for new private nonresiden- 
tial structures. These estimates are prepared along 
with other components of gross private domestic fixed 
investment. New construction force-account compen- 
sation is deflated using the IPD for conservation and 
development construction. 



Sources 



This is a list of information sources used in preparing current- and constant-dollar estimates of Federal 
Government transactions in the national income and product accounts. Many of the sources shown are un- 
published internal recordkeeping documents and files. In some cases, the information used is more detailed 
than that available in the listed source, which is the publication most accessible to the public. 



1. Board of Governors of the Federal Reserve Sys- 
tem. Annual Report. Washington, DC: Board of 
Governors, annually. 

2. Board of Governors of the Federal Reserve Sys- 
tem. Retirement Plan for Employees of the Federal 
Reserve System. New York, NY: Board of Gover- 
nors, annually. 

3. Board of Governors of the Federal Reserve Sys- 
tem. Sector Tables. Flow of Funds Accounts. (Sta- 
tistical Release Z.l.) Washington, DC: Board of 
Governors, quarterly. 

4. Budget documents 



A. Basic 



1. U.S. Executive Office of the President. 
Office of Management and Budget. Bud- 
get of the United States Government. 
Washington, DC: U.S. Government Print- 
ing Office, annually. 

2. U.S. Executive Office of the President. 
Office of Management and Budget. Bud- 
get of the United States Government: Ap- 
pendix. Washington, DC: U.S. Govern- 
ment Printing Office, annually. 

3. U.S. Executive Office of the President. 
Office of Management and Budget. Bud- 
get of the United States Government: Spe- 
cial Analyses. Washington, DC: U.S. 
Government Printing Office, annually. 

B. Supporting 

1. U.S. Executive Office of the President. 
Office of Management and Budget. "Pay 
Raise Impacts." Washington, DC, annu- 
ally, unpublished. 

2. U.S. Department of the Air Force. "Com- 
mittee Staff Procurement Backup Book, 
Aircraft Procurement, Air Force." Wash- 
ington, DC, annually, unpublished. 

3. U.S. Department of the Air Force. "Com- 
mittee Staff Procurement Backup Book, 
Missile Procurement, Air Force." Wash- 
ington, DC, annually, unpublished. 

4. U.S. Department of the Air Force. "Com- 
mittee Staff Procurement Backup Book, 



Other Procurement, Air Force." Wash- 
ington, DC, annually, unpublished. 

5. U.S. Department of the Army. "Procure- 
ment Programs, Committee Staff Pro- 
curement Backup Book, Aircraft Procure- 
ment, Army." (DD-COMP (AR) 1092). 
Washington, DC, annually, unpublished. 

6. U.S. Department of the Army. "Procure- 
ment Programs, Committee Staff Pro- 
curement Backup Book, Missile Procure- 
ment, Army." (DD-COMP (AR) 1092). 
Washington, DC, annually, unpublished. 

7. U.S. Department of the Army. "Procure- 
ment Programs, Committee Staff Pro- 
curement Backup Book, Other Procure- 
ment, Army." (DD-COMP (AR) 1092). 
Washington, DC, annually, unpublished. 

8. U.S. Department of the Army. "Pro- 
curelent Programs, Committee Staff Pro- 
curement Backup Book, Weapons and 
Tracked Combat Vehicle Procurement, 
Army." (DD-COMP (AR) 1092). Wash- 
ington, DC, annually, unpublished. 

9. U.S. Department of the Navy. "Other 
Procurement, Navy, Budget Activity 5, 
Civil Engineering Support Equipment, 
Committee Staff Procurement Backup 
Book." Washington, DC, annually, un- 
published. 

10. U.S. Department of the Navy. "Procure- 
ment, Marine Corps, Budget Activity 5, 
Support Vehicles, Committee Staff Pro- 
curement Backup Book." Washington, 
DC, annually, unpublished. 

11. U.S. Department of the Navy. "Procure- 
ment, Marine Corps, Budget Activity 2, 
Weapons and Tracked Combat Vehicles, 
Committee Staff Procurement Backup 
Book." Washington, DC, annually, un- 
published. 

12. U.S. Department of the Na^/y. "Weapons 
Procurement, Navy, Budget Activity 1, 
Ballistic Missiles, Committee Staff Pro- 
curement Backup Book." Washington, 
DC, annually, unpublished. 

13. U.S. Department of the Navy. "Weapons 
Procurement, Navy, Budget Activity 2, 



65 



66 Government Transactions. 



Jsfovemher 1988 



Other Missiles, Committee Staff Procure- 
ment Backup Book." Washington, DC, 
annually, unpublished. 

14. U.S. Department of the Navy. "Weapons 
Procurement, Navy, Budget Activity 4, 
Other Weapons, Committee Staff Pro- 
curement Backup Book." Washington, 
DC, annually, unpublished. 

15. U.S. Department of the Navy. Naval Air 
Systems Command. "Aircraft Procure- 
ment, Navy, Committee Staff Procure- 
ment Backup Book." Washington, DC, 
annually, unpublished. 

16. U.S. Department of the Navy. Naval 
Sea Systems Command. "Justification 
of Estimates for Fiscal Years Submitted 
to Congress, Procurement, Shipbuilding 
and Conversion, Navy." Washington, DC, 
annually, unpublished. 

5. Construction project reports 

A. U.S. Department of the Army. Corps of Engi- 
neers. "Construction Cost Estimate Code C." 
(Engineering Form 150.) Corps of Engineer 
District Offices in Baltimore, MD; Kansas 
City, MO; Mobile, AL; Norfolk, VA, periodi- 
cally, unpublished. 

B. U.S. Department of the Army. Corps of 
Engineers. "Report of Cost and Analysis — 
Buildings." (DD Form 813.) Washington, DC, 
periodically, unpublished. 

C. U.S. Department of the Army. Corps of Engi- 
neers. "Report of Cost and Analysis — Liquid 
Fueling and Dispensing Facilities and Liquid 
Fuel Storage." (DD Form 813-1.) Washing- 
ton, DC, periodically, unpublished. 

D. U.S. Department of the Army. Corps of 
Engineers. "Report of Cost and Analysis — 
Paving." (DD Form 813-2.) Washington, DC, 
periodically, unpublished. 

E. U.S. Department of Defense. Office of the 
Assistant Secretary of Defense, Comptroller. 
"Construction Programs (C-1), Department of 
Defense Budget." Washington, DC, annually, 
unpublished. 

F. U.S. Department of the Navy. Naval Facil- 
ities Engineering Command. "Schedule of 
Prices." (NAVFAC Report 4330/4.) NAVFAC 
Commands in Norfolk, VA; Washington, DC; 
Philadelphia, PA; Charleston, SC; and San 
Bruno, CA, periodically, unpublished. 

G. U.S. Department of the Navy. Naval Fa- 
cilities Engineering Command, Atlantic Di- 
vision. "Summary Sheets for Jobs Awarded 
by LANTDIV." Norfolk, VA, annually, unpub- 
lished. 



6. Contract awards 

A. U.S. Department of Defense. Office of the 
Secretary of Defense (Comptroller). De- 
partment of Defense Prime Contract Awards. 
Washington, DC: National Technical Infor- 
mation Service, annually. 

B. U.S. Department of Defense. Office of the 
Secretary of Defense (Comptroller). 500 Con- 
tractors Receiving the Largest Dollar Volume 
of Prime Contract Awards for RDT&E. Wash- 
ington, DC: National Technical Information 
Service, annually. 

C. U.S. General Services Administration. Fed- 
eral Procurement Data Center. Federal Pro- 
curement Data System, Special Analysis II. 
Arlington, VA: GSA, quarterly. 

D. U.S. General Services Administration. Fed- 
eral Prociorement Data Center. Federal Pro- 
curement Data System, Standard Report. Ar- 
lington, VA: U.S. Government Printing Office, 
annually. 

E. U.S. General Services Administration. Office 
of Procurement. "Procurement by Commod- 
ity Groups." Arlington, VA, annually, vmpub- 
lished. 

7. Contract control documentation reports 

A. U.S. Department of Defense. Assistant Sec- 
retary of Defense (Comptroller). "Contract 
Cost Data Reports." (DD Form 1921-1.) 
Washington, DC, monthly, unpublished. 

B. U.S. Department of Defense. Assistant Sec- 
retary of Defense (Comptroller). "Cost Funds 
Status Report." Washington, DC, monthly, 
unpublished. 

C. U.S. Department of Defense. Assistant Sec- 
retary of Defense (Comptroller). "Cost Per- 
formance Report." Washington, DC, monthly, 
unpublished. 

D. U.S. Department of Defense. Assis- 
tant Secretary of Defense (Comptroller). 
"Cost/Schedule Status Reports." Washington, 
DC, monthly, unpublished. 

8. Federal Deposit Insurance Corporation. Annual 
Report. Washington, DC: FDIC, annually. 

9. Financial reports 

A. U.S. Department of the Air Force. Head- 
quarters, Air Force Accounting and Finance 
Center. "Appropriation Status by Fiscal Year 
Program and Subaccounts." (DD-COMP (M) 
1002.) Denver, CO, monthly, unpublished. 

B. U.S. Department of the Air Force. Head- 
quarters, Air Force Accounting and Finance 



T 



Government Transactions. 



J-^ovember 1988 67 



Center. "Report on Budget Execution." (DD- 
COMP (M) 1125.) Denver, CO, monthly, un- 
published. 

C. U.S. Department of the Air Force. Headquar- 
ters, Air Force Accounting and Finance Cen- 
ter. "Air Force Stock Fund." (DD-COMP (M) 
1303.) Denver, CO, monthly, unpublished. 

D. U.S. Department of the Air Force. Headquar- 
ters, Air Force Accounting and Finance Cen- 
ter. "Air Force Industrial Fund, Annual Re- 
port for the Department of Defense." (DD- 
COMP (AR) 1307.) Denver, CO, annually, 
unpublished. 

E. U.S. Department of the Air Force. Headquar- 
ters, Air Force Accounting and Finance Cen- 
ter. "Treasury Department Report on Obli- 
gations." (SF 225.) Denver, CO, quarterly, 
unpublished. 

F. U.S. Department of the Army. Finance and 
Accounting Center. "Appropriation Status by 
Fiscal Year Program and Subaccounts." (DD- 
COMP (M) 1002.) Indianapohs, IN, monthly, 
unpublished. 

G. U.S. Department of the Army. Finance and 
Accounting Center. "Report on Budget Ex- 
ecution, Obligation Basis." (DD-COMP (M) 
1125.) Indianapolis, IN, monthly, unpub- 
lished. 

H. U.S. Department of the Army. Finance and 
Accounting Center. "Army Stock Fund." 
(DD-COMP (M) 1303.) Indianapolis, IN, an- 
nually, unpublished. 
I. U.S. Department of the Army. Finance and 
Accounting Center. "Army Industrial Fund, 
Annual Report to the Department of De- 
fense." (DD-COMP (AR) 1307.) Indianapohs, 
IN, annually, unpublished. 

J. U.S. Department of the Army. Finance and 
Accounting Center. "Report on Obligations." 
(SF 225.) Indianapolis, IN, quarterly, unpub- 
lished. 

K U.S. Department of Defense. Assistant Sec- 
retary of Defense, (Comptroller). "Depart- 
ment of Defense Net Monthly Outlays by Ap- 
propriation Title." (FAD 727.) Washington, 
DC, monthly, unpublished. 

L. U.S. Department of Defense. Washington 
Headquarters Service. "Appropriation Status 
by Fiscal Year Program and Subaccounts." 
(DD-COMP (M) 1002.) Washington, DC, 
monthly, unpublished. 

M. U.S. Department of Defense. Washington 
Headquarters Service. "Defense Industrial 
Fund." (DD-COMP (AR) 1307.) Alexandria, 
VA, annually, unpublished. 

N. U.S. Department of Defense. Washington 
Headquarters Service. "Defense Logistic 
Agency Stock Funds." (DD-COMP (M) 1303.) 
Alexandria, VA, monthly, unpublished. 



O. U.S. Department of Defense. Washington 
Headquarters Service. "Report on Budget 
Execution, Obligation Basis." (DD-COMP 
(M) 1125.) Washington, DC, monthly, unpub- 
lished. 

P. U.S. Department of Defense. Washington 
Headquarters Service. "Report on Obliga- 
tions." (SF 225.) Washington, DC, monthly, 
unpublished. 

Q. U.S. Department of the Navy. Office of the 
Navy Comptroller. "Appropriation Status by 
Fiscal Year Program and Subaccounts." (DD- 
COMP (M) 1002.) Arlington, VA, monthly, 
unpublished. 

R. U.S. Department of the Navy. Office of the 
Navy Comptroller. "Navy Industrial Fund." 
(DD-COMP (AR) 1307.) Arlington, VA, annu- 
ally, unpublished. 

S. U.S. Department of the Navy. Office of the 
Navy Comptroller. "Navy Stock Fund." (DD- 
COMP (M) 1303.) Arlington, VA, monthly, 
unpublished. 

T. U.S. Department of the Navy. Office of the 
Navy Comptroller. "Report on Budget Ex- 
ecution, Obligation Basis." (DD-COMP (M) 
1125.) Arlington, VA, monthly, unpublished. 

U. U.S. Department of the Navy. Office of the 
Navy Comptroller. "Report on Obligations." 
(SF 225.) Arlington, VA, monthly, unpub- 
lished. 

10. International Monetary Fund. Bureau of Statis- 
tics. International Financial Statistics. Washing- 
ton, DC: IMF, monthly. 

11. International Thomson Transport Press. The Of- 
ficial Railway Guide, Travel Edition. New York, 
NY: International Thomson Transport Press, bi- 
monthly. 

12. Inventory control systems 

A. U.S. Department of the Air Force. Air Force 
Logistics Command. "Procurement History 
File." (J041.) Warner Robbins AFB, Atlanta, 
GA; McClelland AFB, Sacramento, CA; Kelly 
AFB, San Antonio, TX; Tinker AFB, Okla- 
homa City, OK; Hill AFB, Ogden, UT, quar- 
terly, unpublished. 

B. U.S. Department of the Army. "MILSCAP 
SPNDCOM Computer Tapes." Armament, 
Munitions, and Chemical Command (AMC- 
COM), Rock Island, IL; Troop Support Com- 
mand (TROSCOM), St. Louis, MO; Aviation 
Systems Command (AVSCOM), St. Louis, 
MO; Missile Command (MICOM), Redstone 
Arsenal, AL; Communication-Electronics 
Command (CECOM), Fort Monmouth, NJ, 
quarterly, unpublished. 

C. U.S. General Services Administration. Auto- 
motive Commodity Center. Customer Agency 
Repori. Arlington, VA: GSA, monthly. 



6S Government Transactions. 



J^ovember 1388 



D. U.S. General Services Administration. 
"Schedules Tape." Arlington, VA, quarterly, 
unpublished. 

E. U.S. Veterans' Administration. Operations 
Di\asion. "Stock Fund Tape." Austin, TX, 
quarterly, unpublished. 

13. Manpower reports 

A. Army Times Publishing Company. At Your 
Service Report. Washington, DC: Army 
Times Publishing Company, periodically. 

B. U.S. Department of the Air Force. "Justifica- 
tion of Estimates for Military Personnel, Air 
Force." Washington, DC, annually, unpub- 
hshed. 

C. U.S. Department of the Army. "Justification 
of Estimates for Military Personnel, Army." 
Washington, DC, annually, unpublished. 

D. U.S. Department of Defense. Office of the 
Secretary of Defense. Military Compensa- 
tion Background Papers, Compensation El- 
ements and Related Manpower Cost Items, 
Their Purposes and Legislative Backgrounds. 
Washington, DC: U.S. Government Printing 
Office, quadrennially. 

E. U.S. Department of Defense. Washington 
Headquarters Services. Military Manpower 
Statistics. Washington, DC: U.S. Govern- 
ment Printing Office, quarterly. 

F. U.S. Department of the Navy. "Justification 
of Estimates for Military Personnel, Marine 
Corps." Washington, DC, annually, unpub- 
lished. 

G. U.S. Department of the Navy. "Justification 
of Estimates for Military Personnel, Navy." 
Washington, DC, annually, unpublished. 

H. U.S. Office of Personnel Management. Office 
of Workforce Information. "Current Status 
Report." Washington, DC, quarterly, unpub- 
lished. 

I. U.S. Office of Personnel Management. Of- 
fice of Workforce Information. Federal Civil- 
ian Workforce Statistics, Employment and 
Trends. Washington, DC: U.S. Government 
Printing Office, bimonthly. 

J. U.S. Office of Personnel Management. Of- 
fice of Workforce Information. Federal Civil- 
ian Workforce Statistics, Pay Structure of the 
Federal Civil Service. Washington, DC: U.S. 
Government Printing Office, annually. 
K. U.S. Office of Personnel Management. Office 
of the Actuary. "Unfiinded Liabilities Data." 
Washington, DC, annually, unpublished. 

14. National Aeronautics and Space Administration. 
Financial Management Division. "NASA R&D Re- 
port." Washington, DC, quarterly, unpublished. 

15. National Science Foundation. Division of Sci- 
ence Resources Studies. Federal Funds for Re- 



search and Development, Detailed Historical Ta- 
bles. Washington, DC: National Science Fovmda- 
tion, annually. 

16. Organization for Economic Cooperation and De- 
velopment. Department of Economics and Statis- 
tics. Main Economic Indicators. Paris, France: 
Organization for Economic Cooperation and De- 
velopment, monthly. 

17. Petroleum product reports 

A. U.S. Department of Defense. Defense Lo- 
gistics Agency. "Contract Status Obligation 
Summary by NSN, for Posts, Camps and Sta- 
tions." Cameron Station, Alexandria, VA, 
monthly, unpublished. 

B. U.S. Department of Defense. Defense Logis- 
tics Agency. "FIA Month End Reports, Fi- 
nancial Status Report NSN Summary, Bulk 
Products." Cameron Station, Alexandria, VA, 
monthly, unpublished. 

C. U.S. Department of Defense. Defense Logis- 
tics Agency. "FIA Month End Reports, Fi- 
nancial Status Report NSN Summary, Into 
Plane." Cameron Station, Alexandria, VA, 
monthly, unpublished. 

18. Production control reports 

A. U.S. Department of the Air Force. Air Force 
Systems Command. "Production & Produc- 
tion Difficulty Summary Report, Aircraft, 
Guided Missiles, Aircraft Engines." (RCS: 
HAF-RDX (M).) Andrews AFB, Suitland, MD, 
monthly, unpublished. 

B. U.S. Department of the Air Force. Air Force 
Systems Command. "Reports on Production 
of Aircraft, Missiles and Engines." (RCS: 
HAF-AQX (Q) 7102.) Andrews AFB, Suit- 
land, MD, monthly, unpublished. 

C. U.S. Department of the Army. Headquarters, 
U.S. Army Materiel Command. "End Item 
Actual Delivery Schedule." Alexandria, VA, 
monthly, unpublished. 

D. U.S. Department of the Navy. Naval Air 
Systems Command. "Missile Acceptance Re- 
port." Washington, DC, monthly, unpub- 
lished. 

E. U.S. Department of the Na\^. Naval Sea Sys- 
tems Command. "Ship Acceptance Report." 
Washington, DC, monthly, unpublished. 

F. U.S. Department of the Navy. Naval 
Weapons Engineering Support Activity. "Air- 
craft Engines Acceptance Report." Washing- 
ton, DC, monthly, unpublished. 

G. U.S. Department of the Na^ry. Naval 
Weapons Engineering Support Ac- 
tivity. "Monthly Aircraft Acceptance Report." 
Washington, DC, monthly, unpublished. 



Government Transactions- 



J^ovember 1988 69 



19. Tennessee Valley Authority. Office of the Inspec- 
tor General. Semi-Annual Report. Knoxville, TN: 
TVA, semi-annually. 

20. Tennessee Valley Authority. TVA Retirement Sys- 
tem Board of Directors. TVA Retirement System 
Annual Report. Knoxville, TN: TVA, annually. 

21. United Nations. Department of International 
Economic and Social Affairs. Monthly Bulletin 
of Statistics. New York, NY: United Nations, 
monthly. 

22. U.S. Department of Agriculture. Agricultural 
Marketing Service. Dairy Market Statistics: An- 
nual Summary. Washington, DC: U.S. Govern- 
ment Printing Office, annually. 

23. U.S. Department of Agriculture. Agricultural Sta- 
bilization and Conservation Service. Report of 
Financial Condition and Operations of the Com- 
modity Credit Corporation. Washington, DC: U.S. 
Government Printing Office, annually. 

24. U.S. Department of Agriculture. Food and Nutri- 
tion Service. "Food Program Update." Washing- 
ton, DC, monthly, unpublished. 

25. U.S. Department of Agriculture. Forest Service. 
"Timber Harvested Under Sales and Land Ex- 
changes by Regions." Washington, DC, quarterly, 
unpublished. 

26. U.S. Department of Agriculture. National Agri- 
cultural Statistics Service. Agricultural Prices. 
Washington, DC: Agricultural Statistics Board of 
Publications, monthly. 

27. U.S. Department of the Air Force. Air Force Engi- 
neering and Services Center. "Historical Air Force 
Facility Costs." Tyndall Air Force Base, FL, an- 
nually, unpublished. 

28. U.S. Department of the Air Force. Headquarters, 
Air Force Logistics Command. "Logair Commer- 
cial Expenditure Data." Wright Patterson AFB, 
Da)d;on, OH, quarterly, unpublished. 

29. U.S. Department of the Air Force. Military Air- 
lift Command. "Commercial Augmentation Ex- 
penses." Scott Air Force Base, Belleville, IL, quar- 
terly, unpublished. 

30. U.S. Department of the Army. Military Traf- 
fic Management Command. "Category Z." Falls 
Church, VA, quarterly, unpublished. 

31. U.S. Department of the Army. Military Traffic 
Management Command. "Contract Longshore- 
man's Extra Labor Rate." Falls Church, VA, quar- 
terly, unpublished. 

32. U.S. Department of the Army. Military Traffic 
Management Command. "Defense Price Index Re- 
port: Inland Traffic Price Data." Falls Church, 
VA, quarterly, unpublished. 

33. U.S. Department of the Army. Military Traffic 
Management Command. "Fares Published in Of- 
ficial North American Tariff." Falls Church, VA, 
quarterly, unpublished. 



34. U.S. Department of the Army. Military Traf- 
fic Management Command. "Personal Property 
Rates Per Hundred Weight." Falls Church, VA, 
quarterly, unpublished. 

35. U.S. Department of the Army. Military Traf- 
fic Management Command. "Traffic Management 
Progress Report." Falls Church, VA, quarterly, 
unpublished. 

36. U.S. Department of the Army. Office of the Chief 
of Engineers. "Facilities Engineering and Hous- 
ing Annual Summary of Operations." Washing- 
ton, DC, annuall}', unpublished. 

37. U.S. Department of Commerce. Bureau of the 
Census. Current Construction Reports: Value of 
New Construction Put In Place (C-30). Wash- 
ington, DC: U.S. Government Printing Office, 
monthly. 

38. U.S. Department of Commerce. Bureau of the 
Census. Federal Expenditures by State for Fiscal 
Years. Washington, DC: U.S. Government Print- 
ing Office, annually. 

39. U.S. Department of Commerce. Bureau of the 
Census. Shipments to Federal Government Agen- 
cies. Washington, DC: U.S. Government Printing 
Office, annually. (Last published in 1985.) 

40. U.S. Department of Commerce. Bureau of Eco- 
nomic Analysis. Corporate Profits: Profits Before 
Tax, Profits Tax Liability, and Dividends. (BEA 
Methodology Paper Series MP-2.) Washington, 
DC: U.S. Government Printing Office, May 1985. 

41. U.S. Department of Commerce. Bureau of Eco- 
nomic Analysis. Foreign Transactions. (BEA 
Methodology Paper Series MP-3.) Washington, 
DC: U.S. Government Printing Office, May 1987. 

42. U.S. Department of Commerce. Bureau of Eco- 
nomic Analysis. "Implicit Price Deflators for Mil- 
itary Construction." Survey of Current Business 
63 (November 1983): 14-18. 

43. U.S. Department of Commerce. Bureau of Eco- 
nomic Analysis. "Improved Deflation of Purchases 
of Computers." Survey of Current Business 66 
(March 1986): 7-10. 

44. U.S. Department of Commerce. Bureau of Eco- 
nomic Analysis. Price Changes of Defense Pur- 
chases of the United States. Washington, DC: U.S. 
Government Printing Office, March 1979. 

45. U.S. Department of Commerce. Bureau of Eco- 
nomic Analysis. "Quality-Adjusted Price Indexes 
for Computer Processors and Selected Peripheral 
Equipment." Survey of Current Business 66 (Jan- 
uary 1986): 41-50. 

46. U.S. Department of Commerce. Bureau of Eco- 
nomic Analysis. "U.S. International Transac- 
tions." Quarterly in March, June, September, and 
December issues of Survey of Current Business. 



70 Government Transactions. 



^November 1988 



Washington, DC: U.S. Government Printing Of- 
fice, monthly. 

47. U.S. Department of Defense. Defense Communi- 
cations Agency. "Communication Services Indus- 
trial Fund." (H 670.) Washington, DC, quarterly, 
unpublished. 

48. U.S. Department of Defense. Defense Communi- 
cations Agency. "Communication Services Indus- 
trial Fund." Scott Air Force Base, Belleville, IL, 
quarterly, unpublished. 

49. U.S. Department of Defense. Office of the Actu- 
ary. DOD Statistical Report on the Military Re- 
tirement System. (DDM (A) 1375.) Arlington, VA: 
U.S. Department of Defense, annually. 

50. U.S. Department of Defense. Office of Civilian 
Health and Medical Programs of the Uniformed 
Services. "CHAMPUS Drug Phaseback Report." 
(OCHM-065.) Aurora, CO, monthly, unpublished. 

51. U.S. Department of Defense. Office of Civilian 
Health and Medical Programs of the Uniformed 
Services. "CHAMPUS Statistical Phaseback Re- 
port." (OCHM-055.) Aurora, CO, monthly, un- 
published. 

52. U.S. Department of Energy. Energy Information 
Administration. "Federal Agency Quarterly En- 
ergy Use Report." Washington, DC, quarterly, un- 
published. 

53. U.S. Department of Energy. Energy Informa- 
tion Administration. Monthly Energy Review. 
Washington, DC: U.S. Government Printing Of- 
fice, monthly. 

54. U.S. Department of Energy. Office of Naval 
Petroleum and Oil Shale Reserves. "Monthly 
Sales Distribution of NPR Production." Washing- 
ton, DC, monthly, unpublished. 

55. U.S. Department of Energy. Office of the Strategic 
Petroleum Reserve. "SPR Report." Washington, 
DC, monthly, unpublished. 

56. U.S. Department of Health and Human Services. 
Social Security Administration. Monthly Benefit 
Statistics: Summary Program Data. Washington, 
DC: U.S. Government Printing Office, monthly. 

57. U.S. Department of Health and Human Services. 
Social Security Administration. Social Security 
Bulletin: Annual Statistical Supplement. Wash- 
ington, DC: U.S. Government Printing Office, 
monthly. 

58. U.S. Department of Housing and Urban Develop- 
ment. Office of Housing. Financial Statements 
and Program Highlights of the Federal Housing 
Administration. Washington, DC: U.S. Depart- 
ment of Housing and Urban Development, annu- 
ally. 

59. U.S. Department of Labor. Bureau of Labor 
Statistics. CPI Detailed Report. Washington, DC: 
U.S. Government Printing Office, monthly. 

60. U.S. Department of Labor. Bureau of Labor 
Statistics. Employment and Earnings. Wash- 



ington, DC: U.S. Government Printing Office, 
monthly. 

61. U.S. Department of Labor. Bureau of Labor 
Statistics. Employment and Wages. Washington, 
DC: U.S. Government Printing Office, annually. 

62. U.S. Department of Labor. Bureau of Labor 
Statistics. Producer Prices and Price Indexes. 
Washington, DC: U.S. Government Printing Of- 
fice, monthly. 

63. U.S. Department of Labor. Employment and 
Training Administration. Unemployment Insur- 
ance Financial Data 1938-1982. (ETA Handbook 
394.) Washington, DC: U.S. Department of Labor, 
1984. 

64. U.S. Department of Labor. Employment and 
Training Administration. "Unemployment Insur- 
ance Weekly Claim Report." Washington, DC, 
weekly, unpublished. 

65. U.S. Department of Labor. Employment and 
Training Administration. "Update to ETA Hand- 
book 394." Washington, DC, annually, unpub- 
lished. 

66. U.S. Department of the Navy. Military Sealifl; 
Command. "MSC Commercial Payments." Wash- 
ington, DC, quarterly, unpublished. 

67. U.S. Department of the Navy. MiHtary Sealifi; 
Command. "Shipping Agreement^Contract Cost 
Per M/T for Ocean Transportation, Breakbulk." 
Washington, DC, quarterly, unpublished. 

68. U.S. Department of the Navy. Military Sealifl 
Command. "Shipping Agreement/Contract Cost 
Per M/T for Ocean Transportation, Container." 
Washington, DC, quarterly, unpublished. 

69. U.S. Department of the Navy. Military Sealift 
Command. "Statistical Report, Part 2." (MSC Re- 
port 7700-2.) Washington, DC, annually, unpub- 
lished. 

70. U.S. Department of the Navy. Military Sealift 
Command. "Summary of Time Chartered and 
Contract Operated Ships." Washington, DC, quar- 
terly, unpublished. 

71. U.S. Department of the Navy. Navy Materiel 
Transportation Office. "QuickTrans Cost Data." 
Norfolk, VA, quarterly, unpublished. 

72. U.S. Department of the Treasury. Bureau of Al- 
cohol, Tobacco, and Firearms. Monthly Statistical 
Release: Beer. Washington, DC: U.S. Department 
of the Treasury, monthly. 

73. U.S. Department of the Treasury. Bureau of Al- 
cohol, Tobacco, and Firearms. Monthly Statistical 
Release: Distilled Spirits. Washington, DC: U.S. 
Department of the Treasury, monthly. 

74. U.S. Department of the Treasury. Bureau of Al- 
cohol, Tabacco, and Firearms. Monthly Statistical 
Release: Tobacco Products. Washington, DC: U.S. 
Department of the Treasury, monthly. 

75. U.S. Department of the Treasury. Bureau of Gov- 
ernment Financial Operations. Federal Aid to 



Government Transactions. 



J^ovember 1988 



71 



States. (Comparable data is now included in Fed- 
eral Expenditures by State for Fiscal Years, [ref. 
38].) Washington, DC: U.S. Government Printing 
Office, annually through 1982. 

76. U.S. Department of the Treasury. Financial 
Management Service. Daily Treasury Statement. 
Washington, DC: U.S. Government Printing Of- 
fice, daily. 

77. U.S. Department of the Treasury. Financial Man- 
agement Service. Monthly Treasury Statement of 
Receipts and Outlays of the United States Govern- 
ment (and unpublished detail). Washington, DC: 
U.S. Government Printing Office, monthly. 

78. U.S. Department of the Treasury. Financial Man- 
agement Service. Treasury Bulletin. Washington, 
DC: U.S. Government Printing Office, quarterly. 

79. U.S. Department of the Treasury. Financial Man- 
agement Service. Treasury Combined Statement 
of Receipts, Expenditures, and Balances of the 
United States. Washington, DC: U.S. Government 
Printing Office, annually. (For fiscal years prior 
to 1984.) 

80. U.S. Department of the Treasury. Financial Man- 
agement Service. United States Government An- 
nual Report: Appendix. Washington, DC: U.S. 
Government Printing Office, annually. (For fiscal 
years after 1983.) 

81. U.S. Department of Treasury. Internal Revenue 
Service. Internal Revenue Report of Excise Taxes. 
Washington, DC: Department of the Treasury, 
quarterly. 

82. U.S. Department of Treasury. Internal Revenue 
Service. "Net Tax Refund Report: Nationwide 
Consolidated Report." Washington, DC, monthly, 
unpublished. 

83. U.S. Department of Treasury. Internal Revenue 
Service. Statistics of Income Bulletin. Washing- 
ton, DC: U.S. Government Printing Office, quar- 
terly. 



84. U.S. Department of the Treasury. "Report on For- 
eign Currencies Held by the U.S. Government." 
Washington, DC, semi-annually, unpublished. 

85. U.S. General Services Administration. Public 
Buildings Service. Management Planning and 
Evaluation Office. Summary Report of Real Prop- 
erty Leased by the United States Throughout the 
World. Washington, DC: U.S. Government Print- 
ing Office, annually. 

86. U.S. General Services Administration. Public 
Buildings Service. Management Planning and 
Evaluation Office. Summary Report of Real Prop- 
erty Owned by the United States Throughout the 
World. Washington, DC: U.S. Government Print- 
ing Office, annually. 

87. U.S. General Services Administration. Trans- 
portation and Public Utilities Service. "Federal 
Travel Regulations." Washington, DC, periodi- 
cally, unpublished. 

88. U.S. Postal Service. Department of the Con- 
troller. Summary Financial and Operating State- 
ments. Washington, DC: U.S. Postal Service, ev- 
ery 4 weeks. 

89. U.S. Postal Service. Postal Data Center. "Invoice 
and Statement." (PS Form 1903-DZ.) Washington, 
DC, quarterly, unpublished. 

90. U.S. Postal Service. Postmaster General. Annual 
Report of the Postmaster General. Washington, 
DC: U.S. Postal Service, annually. 

91. U.S. Railroad Retirement Board. Annual Report. 
Chicago, IL: U.S. Railroad Retirement Board, an- 
nually. 

92. U.S. Veterans' Administration. Administrator of 
Veterans Affairs. Annual Report. Washington, 
DC: U.S. Government Printing Office, annually. 

93. U.S. Veterans' Administration. Office of Budget 
and Finance. "Statement of Ledger Assets, In- 
come, and Disbursements, Veterans Life Insur- 
ance." Washington, DC, monthly, unpublished. 



Appendix II-A 

Definitions of the Major Types of 
National Defense Purchases of Goods and Services 



Following are brief definitions of the BEA categories of defense purchases. These categories fall uniquely into 
one of the four major product types of final demand: Durable goods, nondurable goods, services, and structures. 
These categories differ from the similarly named appropriation categories because the latter may include more 
than one of the major product types. For example, the Department of Defense (DOD) appropriation for aircraft 
contains some purchases of engineering services that BEA classifies in services rather than in durable goods. 



Durable goods 

Aircraft: New aircraft, both fixed-wing and rotary 
wing, as well as spare and repair parts, modifi- 
cation kits, and support equipment. 

Missiles: New missiles, launching devices, guidance 
radars, and shelters, as well as space devices such 
as satellites, boosters, and the space shuttle. Also 
included are spare and repair parts, modification 
kits, and support equipment. 

Ships: New ship construction and conversion. This 
category also includes foreign military sales of 
ships during their period of construction. 

Vehicles: New combat and noncombat vehicles as well 
as spare and repair parts, and modification kits. 

Electronic equipment: Nonairborne communication 
and electronic equipment. Items include en- 
cryption equipment, handheld radios, radar sys- 
tems, satellite ground stations, tactical communi- 
cations equipment, sonars, reconnaissance equip- 
ment, and base communication and electronic 
equipment. 

Other military equipment: Other items of equip- 
ment that are uniquely military in nature. Among 
the items included are airfield lights, photo- 
graphic equipment, electronic test equipment, bio- 
logical and chemical defense equipment, night vi- 
sion goggles, sonobuoys, and small arms. 

Other durable goods: Durable goods that are not 
uniquely military in nature. This category in- 
cludes purchases of general purpose computers 
and related equipment. Also included in this cat- 
egory are purchases of durable goods for the mili- 
tary assistance program, sales of durable goods by 
DOD, and purchases of durable goods for defense 
by agencies except DOD. 

Nondurable goods 

Petroleum products: Refined petroleum products 
such as jet fuels and heating oil. 

Ammunition: Bombs, cartridges, torpedoes, mines, 
demolition materials, and other nonnuclear ex- 
plosive products. Also included are the various 



load, assemble, and pack services performed on 
purchased components. 

Other nondurable goods: Food, clothing, printing, 
medical supplies, cleaning supplies, and other 
nondurable goods. Also included are sales of non- 
durable goods by DOD and purchases of non- 
durable goods for the military assistance program. 

Compensation of employees 

Military compensation: Wages and salaries and 
supplements to wages and salaries paid to mil- 
itary employees of DOD. This category also in- 
cludes pay of the military reserve but does 
not include the Coast Guard and the National 
Oceanic and Atmospheric Administration except 
in wartime. 

Civilian compensation: Wages and salaries and 
supplements to wages and salaries paid to civil- 
ian employees of DOD. This category also includes 
employees in defense activities of non-DOD agen- 
cies; it excludes employees of DOD civil functions 
such as the Corps of Engineers. The direct and in- 
direct hire of foreign nationals are excluded from 
this category and are included in the personnel 
support category. 

Other services 

Contractual research and development (R&D): 

Research, development, and test and evaluation 
performed by the private sector under contract to 
DOD. Also included are atomic energy R&D for de- 
fense funded by the Department of Energy (DOE) 
and Federal research centers operated by the pri- 
vate sector, such as the Jet Propulsion Laboratory. 
R&D performed by DOD employees is excluded. 

Installation support: Services related to the op- 
eration and maintenance of military installa- 
tions. Among these services are communications, 
postage, utilities, equipment maintenance and 
rental, property maintenance, housekeeping ser- 
vices, and contractor-operated installations. 



73 



74 Government Transactions. 



Jsfovember 1988 



Weapons support: Depot maintenance, weapons 
modification services, engineering support, sys- 
tem management, and production base support. 
Spare parts and modification kits are included in 
purchases of goods; only purchases of services are 
included in this category. 

Personnel support: Consulting services, training, 
education, and direct and indirect hire of foreign 
nationals. 

Transportation of materiel: Care and movement of 
goods by water, rail, truck, and air. Also included 
are the rental of trucks and other transportation 
equipment and warehousing fees. 

Travel of persons: Care and movement of DOD mil- 
itary and civilian employees. Included are tickets 
for all modes of travel, per diem, taxi fares, au- 



tomobile rental, and mileage allowances for pri- 
vately owned vehicles. 
Other: Services for the military assistance program, 
sales of services by DOD, and purchases of defense 
services by non-DOD agencies. 



Structures 

Military facilities: New construction of facilities 
built to assist, enhance, or house the activities of 
the military services. 

Other structures: Family housing construction, net 
purchases of existing structures, and atomic en- 
ergy defense construction funded by the Depart- 
ment of Energy. 



Appendix II-B 

Federal Government Enterprises 



Commodity Credit Corporation 

U.S. Postal Service 

Insurance enterprises: 

Credit Union Share Insurance Fund 

Federal Deposit Insurance Corporation 

Federal Home Loan Bank Board Revolving Fund 

Federal Housing Administration Fund 

Federal Savings and Loan Insurance Corporation 

Overseas Private Investment Corporation 

Pension Benefit Guaranty Corporation 

Electric power enterprises: 

Bonneville Power Administration 

Lower Colorado River Basin Development Fund 

Southeastern Power Administration 

Southwestern Power Administration 

Tennessee Valley Authority 

Upper Colorado River Basin Fund 

Western Area Power Administration Marketing Fund 

All other enterprises: 

Veterans Canteen Service 
Government Printing Office Sales Fund 
Military Post Exchanges and Restaurants 
Panama Canal Commission 



Note. — The titles used in this list of enterprises are those used in the Budget of the United 
States Government: Appendix. 



75 



Part III. 
State and Local Government Transactions 



Overview of Estimating 
Procedures 

Annual estimates 

The annual NIPA estimates of State and local gov- 
ernment receipts and expenditures are based primar- 
ily on compilations of data on the finances of State 
and local governments. These compilations are pre- 
pared by the Bureau of the Census from the quinquen- 
nial census of governments, annual surveys of govern- 
ment finances and employment, annual surveys of the 
finances of public employee retirement systems, and 
quarterly surveys of tax revenues. Other sources in- 
clude the construction statistics prepared by the Bu- 
reau of the Census, data on transfer payments from 
various agencies of the U.S. Department of Health 
and Human Services (HHS), and the employment and 
wage and salary statistics prepared by the Bureau of 
Labor Statistics (BLS). 

The derivation of the annual estimates of State and 
local government receipts and expenditures on a NIPA 
basis starts with the financial data in the Census of 
Governments [24], for years ending in 2 or 7, and in 
Governmental Finances [29] for other years. Here- 
after, these publications are cited as COG IGF when 
the context is a general description of methodology and 
as COG or GF when information specific to only one 
of the publications is referenced. 

Data from GF are available with a 2-year lag and are 
incorporated in the third annual — or July — revision of 
the NIPA estimates. Data from COG are available 
with a 3-year lag and replace the GF data for cen- 
sus years in the NIPA comprehensive revisions. Esti- 
mates for the second annual revision incorporate both 
preliminary tabulations of unpublished GF data and 
BEA extrapolations of the GF components used; esti- 
mates for the first annual revision incorporate BEA 
extrapolations of the GF components used. In all in- 
stances, the procedure for using the COG IGF data is 
the same. 

Tables III-l and III-2 illustrate the steps involved 
in deriving the NIPA estimates of receipts and expen- 
ditures, respectively, from these reports. The tables 
are an amplification of NIPA table 3.18, which relates 



the NIPA estimates of total receipts and expenditures 
to the COG IGF data. Like NIPA table 3.18, tables 
III-l and III-2 are for a fiscal year, the basis on which 
the COG IGF data are tabulated. For the purposes of 
these tables, the other source data, which are quar- 
terly and monthly, are placed on a fiscal year basis. 
In the actual derivation of the NIPA estimates, which 
is described in the next section, the COG IGF data are 
placed on a calendar year basis. ^ 

In tables III-l and III-2, the first eight columns il- 
lustrate the major steps in the derivation of total re- 
ceipts and expenditures on a NIPA basis. The first 
column shows the major categories of the COG IGF 
data as published.^ The next two columns record the 
replacement of certain of the COG IGF data with alter- 
native source data that are more appropriate for the 
NIPA's; the fourth column shows the result of this re- 
placement. The next four columns record adjustments 
made to the source data used for the NIPA's; these ad- 
justments are for coverage, netting and gi'ossing, fiscal 
year, and timing and other reasons. The ninth column 
shows the estimates of total NIPA receipts and expen- 
ditures that result from this process. The remaining 
columns show the distribution of these totals among 
the NIPA components of receipts and expenditures. 
The year used for illustration in these tables is 1982, 
the most recent year for which the census of govern- 
ments is available; therefore, COG data are shown in 
the first column. For a noncensus year, GF data would 
be shown in the first column; the derivation would be 
the same. 



1. The data included in the COG IGF report for a given year are for fiscal 
years ending at various dates during the 12 months ending June 30 of the 
year specified. 

Because most State governments and State and local government enter- 
prises have fiscal years ending on June 30, for these entities the conversion 
of the COGIGF data to a calendar year basis is accomplished by a 2-year 
average. 

Because local governments have fiscal years ending at various dates during 
the year, for these entities the conversion of the COG IGF data to a calendar 
year basis involves weights based on periodic Census Bureau tabulations by 
ending month of the fiscal year. Denoting the fiscal year running from July 1 
of calendar year t — 1 to June 30 of calendar year t as FY{t) and the calendar 
year t as CY(t), then 

CY{t) - ,33Fy(«) + .65Fy(« -I- 1) + .02FY{t + 2). 

For 1962 and earlier years, the COGIGF data on local governments cover 
fiscal years ending during the calendar year and are assumed to be on a 
calendar year basis, except for school districts, which are lagged six months. 

2. Lines 10 through 16 of column 1 of table III-l are BEA groupings of 
COGIGF detail. The derivation of the entries in these lines is shown in 
Appendix III-A. 



77 



78 Government Transactions. 



J<iovemher 1988 



Table III-1.— Derivation of State and Local Government Receipts in the National Income and Product Accounts (NIPA's) from Census of 

Governments and Other Sources, FY 1982 

[Billions of dollars] 





Census of Governments (COG) categories 








Replacement 


with 






Adjustments 






Reve- 
nues 

(1) 




Equals: 
Used for 
NIPA's 

(4) 


Coverage 
(5) 


Netting 

and 
grossing 

(6) 


Fiscal 
year 

(7) 


Timing 
and other 

(8) 


Equals: 

NIPA 

receipts 

(9) 


Line 


ex 


.ess: 
COG 
:lusions 

(2) 


Plus: 
Replace- 
ments 

(3) 


1 


Total 


547.7 

266.4 
50.7 
15.0 

78.8 
14,8 
82.1 
24.9 

104.0 
13.0 
.7 
15.0 
25.8 
.1 
49.4 

34.0 

56.0 
n.a. 
18.8 
2.5 
34.7 

87.3 

n.a. 


335.4 

248.1 
50.7 
15.0 

78,8 


82,1 
21.5 

















87.3 




338.7 

248.5 
51.0 
14.0 

78.8 


83,6 
21.3 

















90.2 




551.0 

266.8 

51.0 
14.0 

78.8 
14.8 
83.5 
24,7 

104,0 
13.0 

.7 
15.0 
25.8 

.1 
49.4 

34.0 

56,0 


18,8 

2,5 
34.7 

90.2 




-18.6 










-1.7 



-.4 






-1.3 



-16.9 



'-1.1 



'-15.8 






-94.7 










-54.2 
-13.0 

-.3 
-15.0 
-25.8 

-.1 



-34,0 

-5.5 

14.8 

-17.7 

-2.5 



-5.8 

M.7 


0.7 

.3 






.2 


.1 















.5 






-0.9 

-.4 


437.5 

266.7 
51 


2 


Taxes 


3 


Individual income 


4 


Corporation net income 


-.4 



13.6 

78,8 
15,0 
83 5 


5 


Sales and gross receipts: 
State 


6 


Local 


7 


Property 




8 


O^her 




24 8 


9 


Charges and miscellaneous general revenue 


-.5 


47.6 



10 


Government sales 


11 


Sale of property 







12 


Enterprise revenue 







13 


Interest earnings 







14 


Dividends received 







15 


Other 


-.5 


47.6 


16 


Utility and liquor store revenue 


17 


Insurance trust revenue 




34 1 


18 


Employer contributions for government employee retirement funds 




14 8 


19 


Interest received 







20 


Dividends received 







21 


Other 




19 4 


22 


Intergovernmental revenue 




84 4 


23 


Medical vendor payments to public hospitals 




4 7 












Census of Governments (COG) categories 


NIPA 
receipts 

(9) 


NIPA components in which classified 


Line 


Personal tax and nontax receipts 


Corporate 
profits tax 
accruals 

(13) 


Indirect 
business 
tax and 

nontax 
accruals 

(14) 


Contribu- 
tions for 

social 
insurance 

(15) 


Federal 
grants-in- 
aid 

(16) 


Total 
(10) 


Income 
taxes 

(11) 


Other taxes 

and 

nontax es 

(12) 


1 


Total 


437.5 

266.7 
51.0 
13.6 

78.8 
15.0 
83.5 
24,8 

47.6 






47.6 


100.1 

59.5 

50,0 






1.3 
8.1 

35.9 










35.9 


50.0 

50,0 
50.0 


50.1 

9.5 


14.5 

14.5 

1.0 

13.6 


204.4 
19^7 


34.1 




84.4 


2 


Taxes 





3 






4 












5 


Sales and gross receipts: 
State 






78.8 
15.0 
82.2 
16.7 

11.7 






6 














7 






1.3 
8.1 

35.9 








8 


Other 










9 














10 


Government sales 








11 


Sale of property . . 














12 
















13 


Interest earnings ... . 














14 
















15 


Other 




35.9 




11.7 






16 












17 




34.1 

14.8 





19.4 

84.4 

4 7 










4.7 










34.1 
14.8 




18 














19 


interest received 















20 














21 


Other 








19.4 




22 










84,4 


23 


Medical vendor payments to public hospitals 




4.7 
















_ 




. 

















1. Receipts of the unerrployment insurance system, which are treated in Census data as re- 
ceipts to Slates, but as Federal receipts in the NIPA's, 

2. Inclusion of payments to public hospitals on behalf of indigents through medicaid and similar 



programs. Such payments are excluded from Census receipts and expenditures, but are included 
in fJ^lPA receipts and expenditures. 

Note. — Governmental Finances (GF) data are used in noncensus years. 



Government Transactions. 



JNovemher 1988 



79 



Table III-2. — Derivation of State and Local Government Expenditures in the National Income and Product Accounts (NIPA's) from Census of 

Governments and Otfier Sources, FY 1982 

[Billions of dollars] 





Census of Governments {COG) categories 


Expendi- 
tures 

(1) 


Replacement with 
other sources 


Equals: 
Used for 
NIPA's 

(4) 


Adjustments 


Equals: 
NIPA 

expendi- 
tures 

(9) 




Coverage 
(5) 


Netting 

and 
grossing 

(6) 


Fiscal 
year 

(7) 


Timing 
and other 

(8) 


Line 


tess. 
COG 

exclusions 

(2) 


Plus: 
Replace- 
ments 

(3) 


1 


Total 


524.8 

375.1 

' 190.3 

184.8 

66.8 
53.7 
13.1 

17.3 

24.3 

39.5 

1.8 

n.a. 

n.a. 
n.a. 
n.a. 
n.a. 

n.a. 
n.a. 

n.a. 
n.a. 
n.a. 


248.2 

178.0 

178.0 



53.7 

53.7 



14.7 





1.8 
















238.7 

177.5 

177.5 



44.0 

44.0 



15.1 





2.1 
















515.3 

374.6 
189.8 
184.8 

57.1 
44.0 
13.1 

17.8 

24.3 

39.5 

2.1 
















-20.3 

3.0 



'3.0 

-2.7 


-2.7 





-18.1 











--.5 


'3.0 






94.7 

14.8 



14.8 













'4.7 

13.0 

.3 

15.0 

34.0 

17.7 
25.8 

2.5 

.1 

5.8 


1.2 

.6 

.6 

-.1 



-.1 


.6 
.3 










.9 
-.6 






0.4 

.8 
.8 



-.1 

-.1 



401.9 


2 




393.8 


3 


Salaries and wages 


190 6 


4 


Other current operation 


203.2 


5 


Capital outlay 


54 3 


6 




43.9 


7 


Equipment, land, and existing structures 


10 4 


8 


Assistance and subsidies 


17 8 


9 


Interest on debt 




24 9 


10 


Insurance trust benefits and repayments 




21 7 


11 






2 1 


12 


Plus' Medical vendor payments to public hospitals 




4 7 


13 


Less: COG revenue reclassified as NIPA expenditures: 


.1 


13 1 


14 


Sale of properly 


3 


15 


Enterprise revenue 




15 


16 




.1 


33 6 


17 


Interest recerved: 
Insurance trust 


18 6 


18 


Other 




28 2 


19 


Dividends received: 
Insurance trust 




2 5 


20 


Other 




.1 


21 


Intergovernmental revenue (housing and transit subsidies) 




5 8 












Census ot Governments {COG) categories 


Equals: 
NIPA 

expendi- 
tures 

(9) 






NIPA 


components 


in which classified 






Line 


Purchases of goods and services 


Transfer 
payments 

(14) 


Net 

interest 
paid 

(15) 


Less: 
Dividends 
received 

(16) 


Subsidies 




Total 
(10) 


Compen- 
sation 

(11) 


Structures 
(12) 


Other 
(13) 


surpl. of 
govt. ent. 

(17) 


1 


Total 


401.9 

393.8 
190.6 
203.2 

54.3 
43.9 
10.4 

17.8 

24.9 

21.7 

2.1 

4.7 

13.1 

.3 

15.0 

33.6 

18.6 
28.2 

2.5 

.1 

5.8 


356.3 

315.4 
177.5 
137.9 

54.3 
43.9 
10.4 


218.2 

218.2 

177.5 

40.7 




45.1 




93.0 

97.2 


76.4 

30.2 


21.9 




-2.7 




-6.1 


2 


Current operation 


48.2 


3 




13.1 


4 






97.'2 

8.9 


30.2 







35.1 


5 




45.4 
43.9 

1.5 











6 






7 






8.9 










8 


Assistance ar)d subsidies 




17.8 








9 












24.9 






10 


Insurance trust benefits and reoavments 










21.7 
2.1 
4.7 






11 


Intergovernmental expenditures 

















12 



















13 


Less: COG revenue reclassified as NIPA expenditures: 
Government sales 


13.1 
.3 






13.1 








14 


Sale of property 




.3 










15 


Enterprise revenue 












150 


16 


Utility and liquor store revenue 
















33 6 


17 


Interest received: 












18.6 
28.2 






18 


Other 
















19 


Insurance trust 












2.5 
.1 




20 


Other 
















21 

















5.8 























1. The wages and salaries exhibit is $191.6 billion. However, COG excludes from current oper- 
ations force-account wages and salaries for new construction. BEA estimates the force-account 
component of the exhibit is $1.3 billion, leaving $190.3 billion within current operations. 

2. An imputation by BEA of interest earnings and an equal payment for services rendered by 
financial institutions. 

3. Benefit payments by the Unemployment Insurance System, which are treated in Census data 
as State payments, but as Federal payments in the NIPA's. 



4. A BEA estimate of nonoperating receipts included in Census electric utility income. 

5. Inclusion of payments to public hospitals on behalf of indigents through Medicaid and similar 
programs. Such payments are excluded from Census expenditures and receipts, but are included 
in NIPA expenditures and receipts. 

Note. — Governmental Finances {GF) data are used in noncensus years. 



80 Government Transactions. 



JNovember 1988 



Derivation of receipts 

Replacement of COG data with alternative 
source data. — For several components of COG rev- 
enue in table III-l, alternative source data are more 
appropriate for the NIPA estimates either because 
they are consistent with estimates of similar trans- 
actions elsewhere in the NIPA's, because they provide 
more detail on types of receipts, or because they pro- 
vide monthly or quarterly observations that permit a 
more precise assignment of receipts to a given time 
period. The COG revenue data that are replaced and 
their replacements are shown in the second and third 
columns of table III-l. The fourth column of the ta- 
ble shows the resulting data — the starting point for 
the NIPA estimates. 

Most COG taxes are replaced by tax data from the 
Quarterly Summary of Federal, State, and Local Tax 
Revenue {Quarterly Summary) [31] because the latter 
are for a specific quarter and can be summed to a stan- 
dard fiscal or calendar year (lines 3, 4, 5, 7, and 8). 
A replacement is not made for local taxes other than 
property taxes and income taxes because these taxes 
are not well covered in the Quarterly Summary. COG 
intergovernmental revenues, which are largely Fed- 
eral Government payments to State and local govern- 
ments, are replaced by an estimate of Federal grants- 
in-aid derived from Federal budget documents [57] 
(line 22). 

Adjustments. — Adjustments to the source data 
used for the NIPA's for coverage, for netting and 
grossing, for fiscal year, and for other reasons (pri- 
marily timing), are shown in the next four columns 
of table III-l. Coverage adjustments arise because 
COG includes, but the NIPA's exclude, transactions 
in financial assets, transactions in land (including oil 
bonuses), and the transactions of the unemployment 
insurance system (a State program in COG but a Fed- 
eral program in the NIPA's). Netting and grossing 
adjustments are made for two types of transactions: 
Those COG revenue items that are recorded as offsets 
to expenditures in the NIPA's (netting) and those in- 
tragovernmental items that COG excludes from both 
revenues and expenditures (grossing). For this table, 
adjustments are needed to place the COG data for lo- 
cal governments on a common fiscal year ending June 
30. In addition, there are several other adjustments 
to the source data used for the NIPA's; for the most 
part, they reflect timing. 

Coverage adjustments, shown in the fifth column of 
table III-l, are made to the following categories of COG 
revenues: (1) Revenue from the sale of land (including 
oil bonuses) and revenue from financial transactions 
are subtracted from COG charges and miscellaneous 
general revenue (lines 11 and 15), and (2) the interest 
receipts of the unemployment insurance system and 
unemployment taxes collected by the States are sub- 
tracted from insurance trust revenues (lines 19 and 
21). 



Netting adjustments, shown in the sixth column of 
table III-l, are made to the following categories of 
COG revenues for items that are recorded as offsets 
to expenditures in the NIPA's: (1) Government sales, 
sale of property, enterprise revenue, interest earn- 
ings, and dividends received are subtracted from COG 
charges and miscellaneous general revenue Gines 10- 
14); (2) COG utility and liquor store revenue, which 
also are enterprise revenue, are subtracted (line 16); 

(3) interest and dividends received are subtracted from 
COG insurance trust revenue (lines 19 and 20); and 

(4) subsidies — Federal housing and transit subsidies 
paid to State and local government enterprises — are 
subtracted from intergovernmental revenue (line 22). 
These items are also subtracted from expenditures in 
table III-2. 

Grossing adjustments, shown in the sixth column 
of table III-l, are made in the NIPA's for items that 
COG excludes from revenues (and expenditures) as in- 
tragovernmental: (1) Certain employer contributions 
to State and local employee retirement systems (line 
18) are added to COG insurance trust revenue, and 
(2) intragovemmental payments to public hospitals for 
medical assistance on behalf of indigents — medicaid — 
(line 23) are added to receipts. These items are also 
added to expenditures in table III-2. 

Fiscal year adjustments are shown in the seventh 
column of table III-l for local sales and gross receipts 
taxes (line 6), local other taxes (line 8), and other in- 
surance trust revenue (line 21). 

Timing and other adjustments to the source data 
used for the NIPA's are shown in the eighth column of 
table III-l. In the Quarterly Summary, which replaces 
COG data, taxes paid by corporations are recorded on 
a cash basis. In the NIPA's, corporate profits taxes 
are recorded on an accrual basis, and the difference be- 
tween the two bases is entered as a timing adjustment 
in column 8 (line 4). Similar adjustments are made for 
State general sales and motor fiael taxes, which are 
also from the Quarterly Summary, to put them on the 
appropriate NIPA timing basis (line 5). In addition, 
because the quarterly interpolation is carried out be- 
tween calendar year totals in the actual preparation of 
the NIPA estimates, the estimates for the four quar- 
ters of the fiscal year may not sum to the entry in col- 
umn 4. Thus, an adjustment for these differences is 
required for table III-l; it is entered in column 8. The 
only entry is that for other charges and miscellaneous 
general revenue (line 15). 

Distribution of the adjusted data into NIPA 
receipts components. — The NIPA estimates of total 
State and local government receipts that result from 
this process are shown in the ninth column of table III- 
1. The distribution of total NIPA receipts into the ap- 
propriate NIPA components is shown in the remaining 
columns. 

Most individual income taxes are distributed to per- 
sonal tax and nontax receipts. A small part is recorded 
as corporate profits taxes because the Quarterly Sum- 



Government Transactions. 



J^ovember 1988 



81 



mary includes local corporate profits taxes in local in- 
dividual income taxes. Property taxes, other taxes, 
and other charges and miscellaneous general revenue 
are distributed between personal tax and nontax re- 
ceipts and indirect business tax and nontax accruals. 
Insurance trust revenue and intergovernmental rev- 
enue become contributions for social insurance and 
Federal grants-in-aid, respectively. 

Derivation of expenditures 

Replacement of COG data with alternative 
source data. — ^As was the case for receipts, several 
components of COG expenditures are replaced by al- 
ternative source data. The COG expenditures data 
that are replaced and their replacements are shown 
in the second and third columns of table III-2. The 
fourth column of the table shows the data that are the 
starting point for the NIPA estimates. 

The salaries and wages component of COG expen- 
ditures for current operation (line 3) is replaced with 
data from BLS tabulations of employment and wages 
reported by employers covered by State unemployment 
insurance programs [50, 51] because the BLS tabu- 
lations are consistent with the wage and salary esti- 
mates used elsewhere in the NIPA's. In COG capital 
outlay, expenditures for new construction (line 6) are 
replaced with monthly data on new construction from 
Census Bureau Current Construction Reports [26] and 
annual Department of Transportation data on high- 
way construction [54]. These data are available by 
type of construction and are on a put-in-place basis, 
the timing basis used in the NIPA's, unlike the COG 
construction expenditures, which are reported on an 
expenditures basis. In COG assistance and subsidies 
expenditures (line 8), the estimates for various assis- 
tance programs are replaced with data from the HHS 
[40, 41, 42, 44, 45]; these data are available monthly 
rather than annually, and (for Federally assisted pro- 
grams) are a complete count rather than a sample 
survey. For the same reasons, COG State intergov- 
ernmental payments to the Federal Government (line 
11), which are largely payments of supplemental se- 
curity income, are replaced by HHS data [46]. 

Adjustments. — ^Adjustments to the source data 
used for the NIPA's for coverage, for netting and gross- 
ing, for fiscal year, and for other reasons, primarily 
timing, are shown in the next four columns of table III- 
2. For most of them, the nature of the adjustment and 
the reason for it has already been discussed. In addi- 
tion to the types of coverage adjustments mentioned 
for receipts (land, financial assets, and the unemploy- 
ment insurance system), the NIPA's include imputa- 
tions for certain transactions not present in COG. The 
specific imputations are the imputed interest paid by 
depository institutions to State and local governments 
(as interest received) and purchases by State and local 
governments of services furnished without payment by 
depository institutions — that is, financial intermedi- 



aries except life insurance carriers and private non- 
insured pension funds. The imputations arise because 
depository institutions provide services for which the 
intermediaries implicitly compensate themselves, by 
paying depositors less interest on their deposits than 
the interest that the intermediaries earn from lending 
or investing the funds. Because an interest receipt of 
equal value is imputed and added to the monetary in- 
terest receipts of State and local governments, which 
are subtracted from interest payments in the NIPA's, 
the net effect of the imputation on government expen- 
ditures is zero. 

Coverage adjustments, shown in the fifth column 
of table III-2, are made to the following categories of 
expenditures: (1) Imputed bank service charges are 
added to COG current operation expenditures (line 4). 
(2) Purchases of land are subtracted from COG capital 
outlay (line 7). (3) Unemployment insurance benefits 
are subtracted from COG insurance trust expenditures 
(line 10). (4) In years after 1979, certain electric utility 
receipts that do not represent payments for current 
services are subtracted from COG utility and liquor 
store enterprise revenue (line 17). (5) Imputed interest 
received is added to COG interest received (line 19). 

Netting adjustments to expenditures, shown in the 
sixth column of table III-2, are made to subtract the 
following groups of revenue items in COG that are 
recorded as offsets to expenditures in the NIPA's: (1) 
Government sales (line 14); (2) sale of property (line 
15); (3) utility, liquor store, and other enterprise rev- 
enue (lines 16 and 17); (4) interest and dividends re- 
ceived (lines 18-21); and (5) housing and transit sub- 
sidies received by enterprises (line 22). All were sub- 
tracted from receipts in table III-l. 

Grossing adjustments, shown in the sixth column 
of table III-2, are made in the NIPA's for items that 
COG excludes from expenditures (and revenues) as in- 
tragovernmental: (1) Certain employer contributions 
to State and local employee retirement systems are 
added to COG expenditures for current operation (line 
4), and (2) payments to public hospitals for medical 
assistance on behalf of indigents (medicaid) are added 
to expenditures (line 12). All were added to receipts 
in table III-l. 

Fiscal year adjustments are shown in the seventh 
column of table III-2 for expenditures for current op- 
eration (line 4), capital outlay for equipment (line 7), 
interest on debt (line 9), insurance trust benefits (line 
10), and interest received (lines 18 and 19). 

Timing and other adjustments are shown in the 
eighth column of table III-2. In addition, because the 
quarterly interpolation is carried out between calendar 
year totals in the actual preparation of the NIPA esti- 
mates, the estimates for the four quarters of the fiscal 
year may not sum to the entry in column 4. Thus, 
an adjustment for these differences is required for ta- 
ble III-l; it is entered in column 8. Entries are made 
for the salaries and wages component of current op- 
eration (line 3), for construction (line 6), for govern- 



82 Government Transactions. 



^November 1988 



ment sales (line 14), and for utility and liquor store 
enterprise revenue (line 17). (For years immediately 
preceding or following a census of governments, this 
column could also include entries to adjust the GF data 
to levels established in that census; a new GF sample 
based on the most recent census is not drawn until the 
second year after the census is taken.) 

Distribution of the adjusted data into NIPA ex- 
penditures components. — ^The NIPA estimates of to- 
tal State and local government expenditures that re- 
sult from this process are shown in the ninth column 
of table III-2. The distribution of NIPA expenditures 
into the appropriate NIPA components is shown in the 
remaining columns. 

Those parts of expenditures for current operation 
that reflect transfer payments, subsidies, or enter- 
prise outlays — including compensation of enterprise 
employees — are recorded in the appropriate NIPA cat- 
egories; the remainder of expenditures for current op- 
eration, the largest part, is distributed to NIPA gov- 
ernment purchases of goods and services. Capital 
outlays are distributed to NIPA purchases of goods 
and services; interest on debt, to NIPA net interest; 
and assistance and subsidies, insurance trust bene- 
fits, and intergovernmental payments to the Federal 
Government, to NIPA transfer pajonents. Of the ad- 
justment items shown in lines 12-22, medical vendor 
payments to public hospitals is allocated to transfer 
payments; housing and transit subsidies and utility, 
liquor store, and other enterprise revenue to NIPA 
subsidies less current surplus of government enter- 
prises; interest and dividends received, to NIPA net 
interest paid and dividends received, respectively; and 
other government sales, to NIPA purchases of goods 
and services. 

Quarterly estimates 

For the annual revisions, quarterly source data are 
available and are used for the following: Construction, 
the major components of compensation, certain trans- 
fer payments, grants-in-aid from the Federal Govern- 
ment, and most taxes. For the other components, 
there are no quarterly source data; the quarterly es- 
timates are prepared by interpolation of the annual 
estimates. 

For most components of the current estimates, judg- 
mental extrapolations are used. The major exceptions 
are the wages and salaries component of compensation 
of State and local government employees, new con- 
struction put in place, and certain transfer payments; 
for these components, 1 month of source data are avail- 
able for the advance quarterly estimates, 2 months for 
the preliminary estimates, and 3 months for the final 
estimates. In addition, for many taxes, current data 
on the tax base and information on changes in tax law 
are available. 



Constant-dollar estimates of purchases 

For the most part, constant-dollar estimates of State 
and local government purchases of goods and services 
are prepared by deflation, using price indexes taken, 
for the most part, from Current Construction Reports 
[26], BLS Producer Prices and Price Indexes (PPI) [52], 
and BLS CPT Detailed Report [49]. The exceptions, 
both of which are estimated by extrapolating base- 
year values using quantity indicators, are compensa- 
tion and services furnished without payment by de- 
pository institutions (that is, financial intermediaries 
except life insurance carriers and private noninsured 
pension plans). 

Constant-dollar estimates of purchases of structures 
and of other goods and services are prepared by deflat- 
ing the current-dollar estimates, by commodity (that 
is, by type of good or service), by appropriate price 
indexes. For structures, the current-dollar commod- 
ity detail is provided in the source data. For other 
goods and services, the commodity detail is estimated 
by BEA from input-output (I-O) benchmark informa- 
tion on the commodity composition of expenditures, by 
function, and annual Census Bureau data on State and 
local government expenditures, by function. 

Constant-dollar estimates of compensation are the 
product of average base-year compensation, current- 
year employment, and the percentage change in aver- 
age weekly hours from the base year. Constant-dollar 
estimates of services furnished without payment by 
depository institutions are obtained by extrapolating 
the base-year value using employee hours in banking 
as the indicator. 



Derivation of Receipts and 
Expenditures 

Receipts 

The primary source data for the estimates of re- 
ceipts are COG IGF — Governmental Finances [29], 
State Government Finances [32] and, in years end- 
ing in 2 or 7, the census of governments volumes [24], 
all from the Census Bureau. In addition. Finances of 
Employee-Retirement Systems of State and Local Gov- 
ernments {Retirement Systems) [27], a specialized pub- 
lication in the COG IGF series, provides the basic data 
on social insurance funds for all years after 1959, and 
the Quarterly Summary [31] provides data on many 
types of taxes for all years after 1962. 

Before 1952, for State governments, State Govern- 
ment Finances and its predecessors provide the basic 
data for receipts for all years, except 1933-36, when 
these reports were suspended; estimates for these 
years are based on Tax Yields [22], from the Tax Policy 
League, a publication that was based on data compiled 
mainly from questionnaires sent to State tax officials. 



Government Transactions. 



J\Iovember 1988 83 



For local governments, estimates of receipts for 1942 
to 1952 are prepared from annual Census Bureau esti- 
mates of city and county revenues. Estimates for years 
before 1942 were prepared by extrapolation, using es- 
timates prepared by the National Industrial Confer- 
ence Board from fragmentary Census Bureau mate- 
rial [18], reports of tax commissions or similar agen- 
cies, correspondence with public officials, information 
obtained from sample surveys, and a variety of other 
sources. 

Table III-3 presents the derivation of the estimates 
^ for the receipts categories shown in the NIPA tables, 
I at the level of detail presented annually. Because the 
sources of information for States and localities differ. 
States are distinguished from local governments in ta- 
ble III-3, although this detail is not presented in the 
NIPA tables. As previously noted, data from GF are 
available with a 2-year lag and are incorporated in the 
third annual revision of the estimates. Estimates for 
the second annual revision are based on preliminary 
tabulations of unpublished GF data on State govern- 
ments and BEA extrapolations of the GF data on local 
governments. Estimates for the first annual revision 
are based on BEA extrapolations of the GF data on 
both State and local governments. Table III-3 lists 
the sources of the estimates, indicating any differences 
among the various revisions. Also as previously noted, 
the COG IGF data are placed on a calendar year basis 
using the procedures described earlier in footnote 1, 
and several of the components have timing and other 
adjustments as well. 

Table III-3 also indicates the procedure by which 
the quarterly estimates of the major types of taxes 
and nontaxes and contributions are derived. Quar- 
terly seasonally adjusted estimates of taxes and non- 
taxes and contributions are prepared in one of three 
ways. (1) For those taxes and contributions for which 
the quarterly pattern of payments or liabilities reflects 
fluctuations in the tax or contribution base, the quar- 
terly seasonally adjusted estimates are prepared by in- 
terpolating the annual estimates, using the seasonally 
adjusted measure of the tax base as the indicator; the 
initial effects of new legislative actions are estimated 
separately, where available and significant, and added 
in. An example of the use of this approach is per- 
sonal income taxes, which are interpolated and extrap- 
olated using as the indicator the seasonally adjusted 
monthly BEA wages and salaries less those of farm 
and private household workers. (2) For those taxes 
and contributions for which the quarterly pattern re- 
flects less specific sources of variation or for which 
the choice of an indicator is less straightforward, the 
quarterly seasonally adjusted estimates are prepared 
by using the Census X-11 seasonal adjustment proce- 
dure to adjust the quarterly data directly; the initial 
effects of new legislative actions are estimated sepa- 
rately, where available and significant, and added in. 
An example of the use of this approach is severance 
taxes. (3) For taxes for which the quarterly obser- 



vations show no seasonal variation, and for all taxes 
and nontaxes and contributions for which no quarterly 
data are available, the quarterly seasonally adjusted 
estimates are prepared by interpolating the annual to- 
tals quarterly without an indicator and extrapolating 
the current quarterly estimates judgmentally. Exam- 
ples of the use of this approach are motor vehicle li- 
censes, property taxes, nontaxes, and most taxes for 
which the source is COG IGF. 

Quarterly unadjusted estimates also are prepared 
in one of three ways: (1) Where quarterly unadjusted 
data are available, they are the quarterly unadjusted 
estimates. (2) Where quarterly source data are un- 
available, the quarterly unadjusted estimates are the 
same as the quarterly seasonally adjusted estimates 
described above. (3) In one case — corporate profits tax 
accruals — quarterly unadjusted estimates are interpo- 
lated from the annual estimates using an unadjusted 
measure of the tax base as the indicator. 

In addition to the annual and quarterly estimates, 
monthly estimates are prepared for personal tax and 
nontax receipts and for personal contributions for so- 
cial insurance because they are components of the per- 
sonal income and outlay account (which is prepared on 
a monthly basis); although these estimates are pre- 
sented in the NIPA tables, they are not covered in ta- 
ble III-3. 

Taxes and nontaxes 

For years after 1962, estimates for most taxes are 
prepared using data from the Census Bureau's Quar- 
terly Summary and underlying unpublished detail; for 
these taxes, the annual estimates are the sum of four 
quarters of collections data, except for two taxes for 
which timing adjustments are necessary. The esti- 
mates for the remaining taxes — all local — are not well 
covered in the Quarterly Summary and thus are pre- 
pared on the basis of COG IGF data, as are the esti- 
mates of nontaxes. Before 1963, estimates of taxes and 
nontaxes consist of annual data on local taxes (with 
school district property taxes lagged 6 months) and the 
State Finances fiscal year State tax data converted to 
a calendar year basis by a simple average. 

Although many of the tax and nontax items in the 
NIPA's are taken directly from the Census Bureau 
sources, others are distributed among several NIPA 
categories on the basis of other information. Local 
income taxes in the Quarterly Summary (and, until 
1982, in COGIGF) include both individual and corpo- 
rate income taxes; data from local jurisdictions that 
account for most of local corporate profits tax accruals 
are used to separate local corporate profits taxes from 
personal income taxes. Census Bureau data contain 
a category "property tax," with no distinction made 
with respect to the tax base — residential real prop- 
erty, other realty, business inventory or equipment, 
or personal property, such as furniture, personal au- 
tos, or pleasure boats. Using data from quinquen- 



84 Government Transactions. 



J^ovemher 1988 



Table III-3. — State and Local Government Receipts: Sources of Estimates 



Category 



1982 estimates 

(Billions of 

dollars) 



Fiscal 



Calen- 
dar 



Sources 



Annual and quarterly unadjusted ■ 



Quarterly seasonally adjusted 



Receipts 

Personal tax and nontax receipts. 

Income taxes 

State 



437.5 

100.1 
50.0 



Local. 



Other taxes 

Estate and gift taxes , 



9.5 



State , 



Local 

Motor vehicle licenses. 
State 



Local. 



Property taxes . 
State 



Local. 



Other taxes. 
State 



Local , 

Nontaxes.. 
State 



40.6 



Local. 



Addenda: 
Tuition and related educational 

charges. 
Hospital and health charges 



Fines . 
Other. 



Corporate profits tax accruals. 

State 



14.5 



Local 



449.4 

104.9 

51.9 
47.0 



4.9 

9.8 
2.6 
2.5 

.1 

4.6 
4.3 



1.4 
.4 

1.0 

1.3 
.6 



43.2 
15.6 



27.6 

9.3 

24.6 

3.4 

5.9 

14.0 
13.1 

1.0 



QS^. 



QS. ^ Modified to remove corporate profits 
tax. 



QS. 



5 percent of State estimate . 



QS. Allocation between personal and 
business based on registrations. 

QS. Equally divided between personal 
and business. 

QS. Allocation between personal and 

business based on COG. 
QS. Allocation between personal and 

business based on COG. 

QS. 90 percent of hunting and fishing 
licenses plus miscellaneous licenses. 

QS. 10 percent of local less income, 
sales, property, and motor vehicle. 



3rd July: COG/GF-CCMGR. 
1st and 2nd July: Extrapolated 

judg mentally'. 
3rd July: COG/GF—CCMGR. 
1st and 2nd July: Extrapolated 

judgmental ly^ 

COG/GF— CCMGR. Annual estimates 

only. 
COG/GF— CCMGR. Annual estimates 

only. 
COG/GF— CCMGR. Annual estimates 

only. 
COG/GF— CCMGR. Annual estimates 

only. 



QS. Collections related to liability for 2nd 
and 3rd July; estimated as function of 
PBTfor 1st July ■». 

City reports gathered by BEA for 2nd and 
3rd July; estimated as function of PBT 
for 1st July". 



Interpolated and extrapolated using 
wages and salaries as indicator. 

Interpolated and extrapolated using 
wages and salaries as indicator. 



Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 
5 percent of State estimate. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 
Historical: Interpolated without inaicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 
Historical: Interpolatea without inaicator. 
Current: Extrapolated judgmentally. 

Historical: OS— X-11. 
Current: Extrapolated judgmentally. 
Historical: Interpolatea without indicator. 
Current: Extrapolated judgmentally. 



Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 



Annual estimates only. 
Annual estimates only. 
Annual estimates only. 
Annual estimates only. 



Interpolated and extrapolated using 
domestic PBT (less Federal Reserve 
bank profits), seasonally adjusted, as 
indicator. 

Interpolated and extrapolated using 
domestic PBT (less Federal Reserve 
bank profits), seasonally adjusted, as 
indicator. 



See footnotes at end of table 



Government Transactions. 



JMovember 1988 



85 



Table III-3.— State and Local Government Receipts: Sources of Estimates— Continued 



Category 



1982 estimates 

(Billions of 

dollars) 



Fiscal 



Calen- 
dar 



Sources 



Annual and quarterly unadjusted ' 



Quarterly seasonally adjusted 



Indirect business tax and nontax 
accruals. 

Sales taxes 

State 

General 



204.4 



78.8 



Gasoline. 

Liquor 

Tobacco. 



Public utilities 

Insurance receipts 
Other 



Local 

General . 



15.0 



Public utilities. 
Other 



Property taxes. 
State 



82.2 



Local. 



Other taxes 

Motor vehicle licenses. 
State 



Local . 



Severance taxes (State). 



Stock transfer and documentary 

(State). 
Other 

State 



Local . 



Nontaxes. 
State.... 



11.7 



Local. 



Addenda: 
Rents and royalties. 



Special assessments. 

Fines 

Other 



210.8 

96.2 
80.3 
51.2 

10.5 

2.7 

4.1 

5.4 
3.5 
3.0 



15.9 
10.8 



3.2 
1.8 



85.3 
2.8 

82.5 

29.3 
2.1 
1.9 



7.8 



6.5 
3.6 

2.8 



12.4 
5.5 

6.8 

7.5 
1.6 
1.1 
2.2 






OS. ^ Retimed to transactions basis by 

monthly retail sales. 
OS. 2 Retimed to transactions basis by 

DOT highway fuel use. 
QS^ 

QS^ 

OS 

OS 

OS 



3rd July: COG/GF. 

1st and 2nd July: Extrapolated using 

retail sales as indicator ^ ' \ 
3rd July: COG/GF. 
1st and 2nd July: Extrapolated using 

State public utility taxes as indicator ^ '. 
3rd July: COG/GF and OS. 
1st ana 2nd July: Extrapolated 

judgmentally, some OS^ '. 



OS. Allocation between personal and 

business based on COG. 
OS. Allocation between personal and 

business based on COG. 



OS. Allocation between personal and 
business based on registrations. 

OS. Equally divided between personal 
and business. 

OS 

OS 

OS' 

3rd July: COG/GF 
1st and 2nd July: Extrapolated 
judgmentally ^ 

3rd July: COG/GF^CCMGR. 
1st and 2nd July: Extrapolated 
judgmentally f 

3rd July: COG/GF— CCMGR. 
1st and 2nd July: Extrapolated 
judgmentally ^ 

COG/GF— CCMGR. Annual estimates 

only. 
COG/GF— CCMGR. Annual estimates 

only. 
COG/GF— CCMGR. Annual estimates 

only. 
COG/GF— CCMGR. Annual estimates 

only. 



Interpolated and extrapolated using 

monthly retail sales as indicator. 
Interpolated and extrapolated using DOT 

highway fuel use as indicator. 
Interpolated and extrapolated using 

monthly liquor store sales as indicator. 
Interpolated and extrapolated using 

monthly 1982-dollar PCE for tobacco 

as indicator. 
Historical: OS— X-11. 
Current: Extrapolated judgmentally. 
Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 
Historical: OS— X-11 separately for 

parimutuel and miscellaneous and 

amusement. 
Current: Extrapolated judgmentally. 

Interpolated and extrapolated using 
seasonally adjusted retail sales as 
indicator. 

Historical: Interpolated without indicator. 

Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 



Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 



Historical: Interpolated without indicator. 

Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 

Current: Extrapolated judgmentally. 

Historical: OS— X-11. 

Current: Extrapolated judgmentally. 

Historical: OS— X-11. 

Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 
Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 



Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 



Annual estimates only. 
Annual estimates only. 
Annual estimates only. 
Annual estimates only. 



See footnotes at end of table 



86 Government Transactions. 



JNovember 1988 



Table III-3.— State and Local Government Receipts: Sources of Estimates— Continued 





1982 estimates 

(Billions of 

dollars) 


Sources 


Category 


Annual and quarterly unadjusted • 






Fiscal 


Calen- 
dar 


Quarterly seasonally adjusted 


Contributions for social insurance 


34.1 


35.8 

26.4 
23.2 

.1 
3.1 

9.4 
8.6 

.9 
83.9 


3rd July: Ret. Sys.. 
1st and 2nd July: Extrapolated 
judgmentally '. 

SSB^ 




Employer contributions 




State and local employee retirement ... 




Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 
Interpolated and extrapolated using 
wages and salaries as indicator. 


Temporary disability insurance 




Workers' compensation 




3rd July: COG/GF. 
1st and 2nd July: Extrapolated using 
wages salaries as indicator ' '. 

3rd July: Ret. Sys.. 

1st and 2nd July: Extrapolated using 

State and local wages and salaries as 

indicator '. 

SSB^ 


Personal contributions 




State and local employee retirement ... 




Historical: Interpolated using State and 
local wages and salaries as indicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 

MTS. 


Temporary disability insurance 




Federal grants-in-aid 




Budget of the U.S. Government 











1. Except as noted, quarterly unadjusted estimates have the same source as the annual esti- 
mates. 

2. Effects of legislative actions separately calculated, on the basis of contact with State revenue 
officials or from publications recording changes in State (and sometimes local) tax law. 

3. Quarterly unadjusted estimates equal quarterly seasonally adjusted estimates. 

4. Quarterly unadjusted estimates are interpolated and extrapolated using domestic profits 
before tax (less Federal Reserve bank profits) as indicator. See Corporate Profits: Profits Before 
Tax, Profits Tax Liability, and Dividends, Methodology Paper Series MP-2, for a description of the 
indicator. 

5. The annual estimate for the earliest year in a July revision is prepared as a weighted aver- 
age of COG/QF reports for adjacent years. 

6. Quarterly Summary provides data on minor local sales taxes (gasoline, tobacco, liquor) ac- 
counting for $0.2 billion of the $1.8 billion. 

7. Consists of the following taxes; Occupation and business licenses not elsewhere classified, 
corporate licenses-in-general, alcoholic beverage licenses, public utilities licenses, amusement li- 
censes, miscellaneous taxes, and 10 percent of State hunting and fishing licenses. 

8. Estimates are prepared separately for (1) coverage of Slate and local employees, with State 
and local wages and salaries as indicator, and (2) coverage of other workers, with private wages 



and salaries as indicator. 

Note. — "3rd July" and "1st and 2nd July" refer to the third annual revision and the first and 
second annual revisions, respectively. 



CCf^GR 



COG/GF 



l\/ITS 
PBT 

as 

Ret Sys. 
SSB 



Current charges and miscellaneous general revenue. These, in COG/GF, are a 
set of receipts data. Here, CCMGR includes both data published by Census 
and the results of BEA analysis of underlying unpublished data. See appendix 
lll-A. 

Governmental Finances and (in years ending in 2 or 7) Census of Governments 
volumes, both from Census Bureau. This includes not only the basic GF 
volume, but also State Govemment Finances and County Finances. 

Montfily Treasury Statement. 

Profits before tax. 

Quarterly Summary. State quarterly data are unpublished detail; local data are 
derived residualfy. 

Finances of Ervployee-Retirement Systems of Slate and Local Governments, a 
specialized publication in the COG/GF series. 

Social Security Bulletin. 



Government Transactions. 



Jslovember 1988 



87 



nial COG reports on types of property subject to tax, 
the NIPA's distinguish between property taxes paid 
by persons and those paid by business. (The latter 
include all taxes paid on real property, including res- 
idential property, because owner-occupied dwellings 
are treated as a business in the NIPA's.) Census Bu- 
reau data for motor vehicle license taxes do not dis- 
tinguish between those paid on business-owned vehi- 
cles and those paid on personal vehicles; the NIPA 
distinction is based on data from inventory estimates 
for business-used vehicles, based on motor vehicle reg- 
istrations [54]. Census Bureau data on hunting and 
fishing licenses are allocated 90 percent to personal 
and 10 percent to business, the latter on the premise 
that businesses buy licenses for the purpose of enter- 
taining clients. Both personal and business nontaxes 
are derived from COG IGF current charges and mis- 
cellaneous general revenue. The principles governing 
the distribution of these receipts into nontaxes, gov- 
ernment sales, and enterprise revenue were explained 
in the Part I; the details of the derivation are shown 
in appendix table III-A-1. 

Personal tax and nontax receipts. — From 1963 
forward, the annual estimates of most personal taxes 
are prepared as the sum of four quarters of tax col- 
lections data from the Quarterly Summary and its 
underlying unpublished detail. Those that are not 
prepared from the Quarterly Summary are prepared 
from COG IGF. The annual estimates of personal non- 
taxes are prepared from unpublished data underlying 
COG IGF current charges and miscellaneous general 
revenue and, in addition, include the grossing adjust- 
ment discussed above for medicaid payments to public 
hospitals [42]. 

From 1963 forward, quarterly seasonally adjusted 
estimates of personal taxes and nontaxes are prepared 
using the approaches to seasonal adjustment already 
described: Personal income taxes are interpolated and 
extrapolated using NIPA wages and salaries as the in- 
dicator. State other personal taxes are seasonally ad- 
justed directly, and the remaining taxes and nontaxes 
are interpolated without indicator. Current quarterly 
estimates of all but personal income taxes are judg- 
mental extrapolations. For 1959-62, quarterly sea- 
sonally adjusted estimates of all personal taxes and 
nontaxes are interpolated from the annual estimates, 
without an indicator. 

Estimates are prepared monthly, as well as quar- 
terly and annually, because they are a component of 
the personal income and outlay account. For personal 
income taxes, monthly estimates are prepared by in- 
terpolation using NIPA wages and salaries as the in- 
dicator; the impact of legislative actions is estimated 
on a monthly basis to complete the estimates. For 
all other personal taxes and nontaxes, the monthly 
estimates are interpolated without indicator from the 
quarterly seasonally adjusted series and extrapolated 
judgmentally. 



Corporate profits tax accruals. — ^The basic source 
of annual data on State corporate profits tax accruals 
is unpublished State detail on collections data under- 
lying the Census Bureau's Quarterly Summary. To 
relate collections to calendar year liabilities, the quar- 
terly data are lagged on the basis of a 1977-78 BEA 
study of certain features of State corporate laws — 
when estimated taxes were due, settlements made, 
etc. This study, based on the Commerce Clearing 
House State Tax Guide [11], provided information on 
the relationship between t£ix collection and tax liabil- 
ity; for each annual revision, the relationship between 
tax collections and liabilities is modified as required 
to reflect changes in tax laws. 

Data for local corporate profits taxes are not avail- 
able from any single source. In recent years, data ob- 
tained from New York City [10] and information from 
the tax office of Washington, DC, have been incor- 
porated; since about 1970, these two cities have ac- 
counted for almost all of local profits taxes. For earlier 
years, the estimates are based on Tax Foundation [21] 
estimates prepared for several years around 1965. 

Quarterly estimates of total State and local corpo- 
rate profits tax accruals, seasonally adjusted and un- 
adjusted, are prepared from the annual liability to- 
tals by interpolation and extrapolation using NIPA es- 
timates of domestic corporate profits before tax (less 
Federal Reserve profits), as the indicator. (See Corpo- 
rate Profits: Profits Before Tax, Profits Tax Liability, 
and Dividends, Methodology Paper Series MP-2, for a 
description of these estimates.) 

Indirect business tax and nontax accruals. — 

From 1963 forward, indirect business tax data are 
from the Quarterly Summary and underlying unpub- 
lished detail, with a few exceptions. Annual data 
for most State taxes are the sum of four quarters of 
Quarterly Summary collections data. For State gen- 
eral sales taxes and State gasoline taxes, however, 
the quarterly collections data are lagged 1 month in 
proportion to retail sales [25, with some BEA mod- 
ification] and fuel consumption [54], respectively, to 
derive the appropriate NIPA liability measure. 

The annual estimates of local sales taxes, local mo- 
tor vehicle licenses, local miscellaneous indirect busi- 
ness taxes, and all nontaxes are based primarily on 
COG IGF. Quarterly seasonally adjusted estimates are 
prepared by interpolation without an indicator, except 
for local general sales taxes, which are interpolated 
using retail sales as the indicator. Current quarterly 
estimates are extrapolated judgmentally. 

Quarterly seasonally adjusted estimates are pre- 
pared using the three approaches already described. 
State and local general sales and use taxes and State 
taxes on gasoline, liquor, and tobacco are interpo- 
lated and extrapolated from the annual estimates us- 
ing the tax base as the indicator; estimates of the 
effects of legislative action are estimated separately 
and added. Unadjusted quarterly data for State pub- 
lic utilities gross receipts taxes, other State sales taxes 



88 Government Transactions. 



J^ovemher 1988 



(parimutuel taxes, miscellaneous gross receipts taxes, 
and amusement sales taxes), State severance taxes, 
and State documentary and transfer taxes are season- 
ally adjusted directly, using the Census X-11 proce- 
dure. For property taxes and all remaining taxes, the 
quarterly seasonally adjusted estimates are interpo- 
lated from the annual estimates without indicator, and 
cun-ent estimates are extrapolated judgmentally. The 
last procedure is also used for quarterly estimates of 
both State and local indirect business nontaxes. 

Contributions for social insurance 

Annual estimates of contributions for social insur- 
ance are prepared at the level of detail shown in ta- 
ble III-3. Estimates are prepared monthly, as well as 
quai'terly and annually, because they are a component 
of the personal income and outlay account. 

The source for annual estimates of both employer 
and personal contributions to State and local employee 
retirement funds is the Census Bureau publication Re- 
tirement Systems. To derive calendar year estimates, 
the annual data for individual retirement fiinds are 
grouped by the ending month of their fiscal years and 
then weighted by the number of months that fall into 
each calendar year. Monthly seasonally adjusted esti- 
mates of employer contributions are interpolated from 
the annual estimates without indicator. Monthly sea- 
sonally adjusted estimates of personal contributions 
are interpolated using State and local government em- 
ployee wages and salaries as the indicator. For both 
employer and personal contributions, current monthly 
estimates are extrapolated judgmentally. Quarterly 
estimates are summed from the monthly estimates. 

Data for employer and personal contributions to 
temporary disability insurance funds are ft'om the So- 
cial Security Bulletin: Annual Statistical Supplement, 
published by the Social Security Administration (SSA) 
[45]. Monthly seasonally adjusted estimates are inter- 
polated from the annual estimates without indicator; 
the current monthly estimates are extrapolated judg- 
mentally. Quarterly estimates are summed from the 
monthly estimates. 

Fiscal year data for employer contributions — there 
are no personal contributions — to State-administered 
workers' compensation funds are from State Finances 
and are averaged to estimate calendar year totals. 
Monthly estimates are interpolated from the annual 
estim.ates using State and local government employee 
wages and salaries as the indicator for contributions 
for State and local government employees and pri- 
vate wages and salaries for the remainder; the cur- 
rent monthly estimates are extrapolated judgmen- 
tally. Quarterly estimates are summed from the 
monthly estimates. 

Federal grants-in-aid 

See Part II, Federal Government Transactions. 



Expenditures 

The primary source data for the estimates of expen- 
ditures are COG IGF — Governmental Finances [29], 
State Government Finances [32] and, in years ending 
in 2 or 7, the census of governments volumes [24], all 
from the Census Bureau. In addition. Retirement Sys- 
tems [27], a specialized publication in the COG IGF 
series, provides the basic data on employee retire- 
ment funds for all years after 1959. Other sources in- 
clude the construction statistics prepared by the Cen- 
sus Bureau [26], data on transfer payments from HHS 
[40, 41, 42, 44, 45], and the employment and wage 
and salary statistics prepared by the Bureau of Labor 
Statistics (BLS) [50, 51]. 

Estimates of expenditures for years before 1952 are 
based on State Finances and the available Census 
Bureau estimates of local expenditures, the Census 
Bureau construction statistics, information on trans- 
fer payments from HHS, and the BLS employment 
and earnings statistics. For the years before 1942 for 
which the data are fragmentary, the estimates of pur- 
chases other than construction and compensation are 
prepared by interpolation, using State and local com- 
pensation as the indicator. 

Table 111-4 presents the derivation of the estimates 
for the expenditure categories shown in the NIPA ta- 
bles, at the level of detail presented annually. Al- 
though the sources of information for States and lo- 
calities differ, States are not distinguished from local 
governments in table III-4 or in the NIPA tables. As 
previously noted, data from GF are available with a 
2-year lag and are incorporated in the third annual 
revision of the estimates. Estimates for the second an- 
nual revision are based on preliminary tabulations of 
unpublished GF on State governments data and BEA 
extrapolations of the GF data on local governments. 
Estimates for the first annual revision are based on 
BEA extrapolations of the GF data for both State and 
local governments. Table III-4 lists the sources of the 
estimates, indicating any differences among the vari- 
ous revisions. Also as previously noted, the COG IGF 
data are placed on a calendar year basis using the pro- 
cedures described earlier in footnote 1, and several of 
the components have timing and other adjustments as 
well. 

Table III-4 also indicates the procedure by which 
the quarterly estimates of the major types of expen- 
ditures are derived. Quarterly (and, where neces- 
saiy, monthly) seasonally adjusted estimates of expen- 
ditures are prepared using one of three approaches: 
(1) For those expenditures for which quarterly data 
are available, the quarterly seasonally adjusted esti- 
mates are prepared by using the Census X-11 seasonal 
adjustment procedure to adjust the quarterly data di- 
rectly. (2) For those expenditures for which only an- 
nual data are available but for which the quarterly 
pattern of outlays may be assumed to reflect fluctu- 
ations in another expenditure component or in some 
other related series, the quarterly seasonally adjusted 



Government Transactions. 



J^ovember 1988 



89 



Table III-4. — State and Local Government Expenditures: Sources of Estimates 





1982 estimates 

(Billions of 

dollars) 


Sou 


rces 




Annual 




Category 


Fiscal 
year 


Calen- 
dar 
year 


Quarterly ' 


Expenditures 


401.9 

356.3 
218.3 


414.3 

369.0 

226.9 
183.8 

23.2 

3.2 

16.7 

43.7 

43.6 

1.2 

1.1 

3.3 
95.1 

79.9 

23.0 
19.3 

1.0 
2.7 

51.8 
31.7 

13.3 

2.1 
1.9 

1.6 

1.2 


BLS tabulations 




Purchases of goods and services 




Compensation of employees ^ 




Wages and salaries 


Historical: Interpolated using preliminary 

estimates as indicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated using preliminary 

estimates as indicator. 
Current: Extrapolated judgmentally. 
Interpolated and extrapolated using State 

and local wages and salaries as 

indicator. 

Historical: Interpolated using preliminary 

estimates as indicator. 
Current: Extrapolated judgmentally. 


Employer contributions for social 
insurance: 
State or locally administered 




3rd July: Ret. Sys.. 
1st and 2nd July: Extrapolated 
judgmental ly. 


system. 
Federally administered system 




Othier labor income 




3rd July: COG/GF, insurance carrier 

reports. 
1st and 2nd July: Extrapolated 

judgmentally, insurance carrier reports. 

Census C-30, Highway Statistics 


Structures 


45.1 


New 


Census C-30— X-1 1 , Highway Statistics. ^ 
Historical: Interpolated without indicator. 


Existing (net) 




COG/GF; CCMGR 


Less: Force-account compensation 




I-O benchmarks interpolated and 
extrapolated using highway, education, 
and all other new construction as 
indicators. 

FDIC and FRB data on ownership of 
deposits and property income receipts 
of commercial banks. 

3rd July: COG/GF SF COG/GF— 

CCN4gR, Bowker. 
1st and 2nd July: Extrapolated 

judgmentally, Bowker. 

3rd July: Ret. Sys.. 
1st and 2nd July: Extrapolated 
judgmentally. 

SSB 


Current: Extrapolated judgmentally. 

Historical: Interpolated and extrapolated 
using hospital, education, and all other 
new construction as indicators. 

Current: Extrapolated using highway new 
construction as indicator. 

Historical: Interpolated using FFA State 
and local holdings of demand and time 
deposits as indicator. 

Current: Extrapolated judgmentally. 

Historical; Interpolated without indicator. 
Current: Extrapolated judgmentally. 


Financial services furnished without 
payment by financial institutions 
except life insurance carriers and 
private noninsured pension plans. 

Other goods and services 


3.0 
90.0 

76.4 


Transfer payments to persons 


Benefits from social insurance funds 




State and local employee retirement ... 




Historical: Interpolated without indicator. 
Current; Extrapolated judgmentally. 

Historical' Interpolated without indicator '' 


Temporary disability insurance 




Workers' compensation 




3rd July; SF 

1st anc: 2nd July: Extrapolated 
judgmentally. 

HCFA 


Current: Extrapolated judgmentally. 
Historical: Interpolated without indicator. 


Public assistance 




Current: Extrapolated judgmentally. 


Medical care ' 




Historical: Interpolated without indicator ' 


Aid to families with dependent 

children (AFDC).. 
Supplemental security income 




OFA 


Current: Extrapolated judgmentally. 
OFA (monthly)— X-1 1.3 

ORS-SSA (monthly)— X1 1. 3 
Historical: Interpolated without indicator 
Current: Extrapolated judgmentally. 
Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 
Historical: OFA ORS-SSA— X-1 1 ^ 




ORS-SSA 


General assistance ' 




State reports 


Energy assistance 




Federal grants; SSB 


Other'' 




OFA; ORS-SSA 








Current: Extrapolated judgmentally. 



See footnotes at end of table 



90 Government Transactions. 



JMovember 1988 



Table III-4.— State and Local Government Expenditures: Sources of Estimates — Continued 



Category 



1982 estimates 

(Billions of 

dollars) 



Fiscal 
year 



Calen- 
dar 
year 



Sources 



Annual 



Quarterly ' 



Transfer payments to persons- 
Continued 

Education ' 



Employment and training '. 



Other. 



Net interest paid. 

Interest paid 



Less: Interest received by government. 

Monetary 

Other funds 



-21.9 
24.9 



46.8 
43.8 



Social insurance funds: 
Workers' compensation. 



Temporary disability insurance '" . 



Retirement systems , 



Imputed , 



Less: Dividends received by 
government. 

Retirement systems 



3.0 



2.7 



Government. 



2.7 



1.1 



1.3 



-24.4 
27.1 



51.5 
48.2 
26.2 



1.2 

.1 

20,8 

3.3 

2.9 
2.8 



3rd July: SF. 

1st and 2nd July: Extrapolated 
judg mentally. 

3rd July: Federal grants. 
1st and 2nd July: Extrapolated 
judgmentally. 

3rd July: SF, OFA, Department of Justice, 

State of Alaska. 
1st and 2nd July: Extrapolated 

judgmentally, State of Alaska. 



3rd July: COG/GF 
1st and 2nd July: Extrapolated 
judgmentally. 



3rd July: COG/GF CCIVIGR. 
1st and 2nd July: Extrapolated 
judgmentally. 

3rd July: SF 

1st and 2nd July: Extrapolated 

judgmentally. 
3rd July: SF. 
1st and 2nd July: Extrapolated 

judgmentally. 
3rd July: Ret. Sys.. 
1st and 2nd July: Extrapolated 

judgmentally. 

FDIC and FRB data on ownership of 
deposits and property income receipts 
of commercial banks. 



Sum of quarters. 



3rd July: SF 
1st and 2nd July: 
judgmentally. 



Extrapolated 



Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator, 

Stateof Alaska— XII. 
Current: Extrapolated judgmentally. 



Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 



Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 



Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 

Historical: Interpolated using FFA State 
and local government holdings of 
demand and time deposits as as 
indicator. 

Current: Extrapolated judgmentally. 



Historical: Selected Retirement; Standard 

& Poor's dividend/price ratioSee text. 
Current: Extrapolated judgmentally. 

Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 



See footnotes at end of table 



Government Transactions. 



November 1988 91 



Table III-4.— State and Local Government Expenditures: Sources of Estimates— Continued 



Category 



1982 estimates 

(Billions of 

dollars) 



Fiscal 
year 



Calen- 
dar 
year 



Sources 



Annual 



Quarterly 



Subsidies less current surplus of 
government enterprises. 

Subsidies 



-6.1 



Less: Current surplus of government 
enterprises. 

Current operating receipts 



-7.3 

.5 

7.8 
57.1 



Current operating outlays. 



49.4 



Addenda: 

Water and sewerage 

Gas and electricity 

Toll facilities 

Liquor stores 

Air and water terminals 

Housing and urban renewal. 

Public transit 

Other 



Less: Wage accruals less 
disbursements. 

Surplus or deficit (-), national income 
and product accounts. 

Social insurance funds 





35.6 



Otfier. 



2.3 
3.5 
1.1 
.5 
1.1 
1.3 
-3.5 
1.5 



35.1 

36.9 
-1.7 



Assoc, of Amer. Railroads: 1983 estimate 
extrapoextrapolated judgmentally. 



3rd July: COG/GF, COG/GF— CCMGR, 
MTS, Highway Statistics, "Gaming and 
Wagering Business," State reports on 
off -track betting. 

1st and 2nd July: Extrapolated 
judgmentally, MTS. Highway Statistics, 
"Gaming and Wagering Business," 
State reports on off-track betting. 

3rd July: COG/GF. COG/GF— CCMGR, 
Highway Statistics,"Gam'\ng and 
Wagering Business," State reports on 
off-track betting, SF, Ret. Sys. 

1st and 2nd July: Extrapolated 
judgmentally. Highway Statistics. 
"Gaming and Wagering Business," 
State reports on off-track betting. 

Receipts less expenditures 

Receipts less expenditures 

Receipts less expenditures 

Receipts less expenditures 

Receipts less expenditures 

Receipts less expenditures 

Receipts less expenditures 

Receipts less expenditures 

Reports from jurisdictions affected by 
strikes. 

Total receipts less total expenditures 



Historical: Interpolated without indicator. 
Current; Extrapolated judgmentally. 



Historical: Interpolated without indicator, 
Mrs— X1 1.3 

Current: Extrapolated judgmentally. 



Historical: Interpolated without indicator. 
Current: Extrapolated judgmentally. 



Annual 
Annual 
Annual 
Annual 
Annual 
Annual 
Annual 
Annual 



estimates only 
estimates only 
estimates only 
estimates only 
estimates only 
estimates only 
estimates only 
estimates only 



Net sum of social insurance fund 

components above. 
Total less social insurance funds. 



Reports from jurisdictions affected by 
strikes. 

Total receipts less total expenditures. 

Net sum of social insurance fund 

components above. 
Total less social insurance funds. 



1. Except as noted, quarterly seasonally adjusted and unadjusted estimates are the same. 

2. Allocation between general government and government enterprises based on Public Em- 
ployment. 

3. Unadjusted quarterly estimates from same source as annual. 

4. Before 1980. monthly data were available from the Departn-ent of Labor. 

5. Medical vendor payments, mostly Medicaid; for remainder, only ad hoc studies available 
after ^98Z 

6. Before 1981, data available from HHS. 

7. Emergency assistance and medical premium payments for indigents. 

S. Scholarship funds for State universities and colleges; State grants to private educational in- 
stitutions. 

9. Since 1982, payments to nonprofit institutions administering training programs. 

10. Data from California, New Jersey, New York, and Rhode Island. 

Note. — "3rd July" and "1st and 2nd July" refer to the third annual revision and the first and 
second annual revisions, respectively. 

BLS tabulations BLS tabulations of average weekly hours and of employment and wages 

reported by errployers covered by State unemployment Insurance 
prograrre. 



CCMGR 



Census C-30 
COG/GF 



ETA 

Federal grants 
HCFA 

MTS 
OFA 

ORS-SSA 
Ret. Sys. 

Selected 

Retirement 
SF 
SSB 



Current charges and miscellaneous general revenue. These, in COG' 
GF, are a set of receipts data. Here, CCMGR includes both data 
published by Census and the results of BEA analysis of underlying 
unpublished detail. 

Current Construction Reports: Value of New Construction Put in Place. 

Governmental Finances and, in years ending in 2 or 7. census of 
governments volumes, both from Census Bureau. This includes not 
only the basic GF volume, but also State Government Finances and 
County Finances. 

Employment and Training Administration, U.S. Department of Labor. 

Federal grants to State and local governments. See part II. 

Health Care Financing Administration, U.S. Department of Health and 
Human Services. 

Monthly Treasury Statement. 

Office of Family Assistance, U.S. Department of Health and Human 
Services. 

Office of Research and Statistics. Social Security Administration. 

Finances of Employee-Retirement Systems of State and Local 
Govemments. a specialized publication in the COG/GF series. 

Finances of Selected Public Employee-Retirement Systems. 

State GovemmenI Finances. 
Social Security Bulletin. 



92 Government Transactions. 



J-Jovember 1988 



estimates are prepared by interpolating the annual es- 
timates, using a seasonally adjusted measure of the 
expenditure component or other related series as indi- 
cator. (3) For those expenditures for which neither 
quarterly data nor any indicator are available, the 
quarterly seasonally adjusted estimates are prepared 
by interpolating the annual totals quarterly without 
an indicator and extrapolating the current quarterly 
estimates judgmentally. 

Quarterly unadjusted estimates also are prepared 
in one of two ways: (1) Where quarterly data are 
available, they are the quarterly unadjusted esti- 
mates. (2) Where quarterly source data are unavail- 
able, the quarterly unadjusted estimates are the same 
as the quarterly seasonally adjusted estimates de- 
scribed above. 

In addition to the annual and quarterly estimates, 
monthly estimates are prepared for transfer payments 
to persons because they are components of the per- 
sonal income and outlay account; although these esti- 
mates are presented in the NIPA tables, they are not 
covered in table III-4. 

Purchases of goods and services 

State and local government purchases are classi- 
fied as durable goods, nondurable goods, services, and 
structures. For estimation, two types of services are 
treated separately. They are compensation of employ- 
ees and services furnished without payment by depos- 
itory institutions. The remaining services, along with 
durable and nondurable goods, are first estimated in 
total. The total is then distributed among durable 
goods, nondurable goods, and other services. 

With the exception of compensation, new construc- 
tion, and imputed financial services, no comprehen- 
sive direct measure of purchases, by commodity, are 
available for State and local governments. Instead, 
government expenditures in COG IGF are classified by 
function — that is, by the purpose of the expenditure. 
(The functions are listed in appendix B.) Therefore, 
an indirect procedure is used to estimate purchases 
of goods and services, by commodity, from the annual 
COG IGF functional data on current operation, capi- 
tal outlay, and general government sales. The proce- 
dure uses benchmark information, by function, on the 
commodity composition of State and local government 
purchases from the BEA input-output (I-O) tables. 

Table III-4 shows the sources used for the estimates 
of compensation of employees, structures, services fur- 
nished without payment by depository institutions, 
and all other goods and services. The sources for the 
last, summarized as COG IGF in table III-4, are more 
extensive in fact, and the procedure in which they are 
used is described more fully in table III-5. 

Compensation of employees. — Compensation of 
employees consists of wages and salaries, employer 
contributions for social insurance, and other labor 
income — that is, employer payments to private pen- 



sion, group health insurance, and group life insurance 
plans and several minor categories of employee com- 
pensation (compensation of prison inmates and judi- 
cial fees to jurors and witnesses). 

For wages and salaries, the annual estimates are 
based on BLS tabulations of employment and wages 
reported by employers covered by State unemployment 
insurance programs [50, 51]. For employer contribu- 
tions for social insurance, the annual estimates are 
based on the estimates described above for receipts 
of employer contributions to State and local govern- 
ment employee retirement funds [27] and on Social Se- 
cixrity Administration data on old-age, survivors, dis- 
ability and health insurance (OASDHI) contributions 
[45]. For other labor income, the annual estimates 
are based on COG data on the group health and life 
insurance coverage of State and local government em- 
ployees and on employer contributions to these pro- 
grams [24] and annual Census Bureau data on State 
and local government employment [30]; annual reports 
of private pension and insurance carriers [1, 5, 15, 
23, 43]; annual data on average compensation of Fed- 
eral prison inmates and on numbers of State prison in- 
mates [14, 47]; and GF data on judicial expenditures. 

Quarterly seasonally adjusted estimates of compen- 
sation are summed from monthly series, the basis on 
which they are prepared. Wages and salaries, em- 
ployer contributions for social insurance (other than 
to Federal systems), and other labor income are inter- 
polated using the preliminary estimates as indicator. 
Employer contributions to Federal systems are inter- 
polated using State and local wages and salaries as the 
indicator. Current quarterly (and monthly) estimates 
are extrapolated judgmentally. 

The source data for compensation cover all State 
and local government employees; they are distributed 
between compensation paid to employees of govern- 
ment enterprises and that paid to employees of gen- 
eral government. (The former is part of the deriva- 
tion of the surplus of government enterprises; enter- 
prise current-account purchases are not included in 
government purchases of goods and services.) Wages 
and salaries is distributed using data on wages and 
salaries from the Census Bureau's October survey of 
public employment [30]. Certain supplements (chiefly 
pension fund contributions and some health and life 
insurance programs dedicated to education employees) 
are assigned to the particular categories of employees; 
the rest are allocated among employees of government 
enterprises and general government essentially in pro- 
portion to wages and salaries for the two groups. 

Structures. — Purchases of structures consist of new 
construction put in place and purchases (net of sales) 
of existing structures. Compensation paid to State and 
local government employees engaged in force-account 
construction is subtracted from the value of new con- 
struction put in place to avoid double-counting because 
it is included in general government compensation. 



Government Transactions. 



J\Iovember 1988 93 



Estimates of piirchases of new constiniction put in 
place are obtained, for the most part, from the Census 
Bureau [26], which, since 1975, has conducted a direct 
survey of construction projects in which information 
is gathered about the value of construction completed 
each month on a sample of projects. (Before 1975, data 
on construction expenditures were collected monthly 
and lagged 1 month to approximate the put-in-place 
timing.) For nine types of construction, these monthly 
unadjusted data are summed to a calendar year series. 
Monthly seasonally adjusted estimates are prepared, 
using the Census X-11 seasonal adjustment procedure. 
Quarterly estimates are summed from the monthly se- 
ries. 

BEA departs from the Census Bureau construction 
data because of evident underreporting in three cases. 
(1) For the years 1972-75, as funds from the Federal 
Clean Water Act become available, BEA modified the 
Census Bureau sewer construction data because the 
sample design for the expenditures survey was not to- 
tally successful in capturing a representative compo- 
nent of the new special districts created to build and 
operate new systems. (2) For 1975 and later years, 
BEA bases its annual estimates of highway construc- 
tion on data from Highway Statistics [54], Federal 
Highway Administration, because of known problems 
in the put-in-place data for highways from the Census 
Bureau construction statistics and the annual high- 
way expenditures estimates from COG IGF. The Fed- 
eral Highway Administration data are adjusted to re- 
move expenditures for resurfacing, restoration, and re- 
habilitation, which are classified as maintenance and 
repair — not new construction — in the NIPA's. Monthly 
estimates are prepared by interpolation and extrapo- 
lation, using the Census Bureau construction series 
as the indicator. Quarterly estimates are summed 
from the monthly estimates. (3) For 1983 and later 
years, BEA adjusts the Census Bureau estimate of 
public electric generating plants to include the publicly 
owned component of jointly constructed plants where 
the State or local government is a minority partici- 
pant. This component has been omitted in the Census 
Bureau put-in-place compilation. The adjustments are 
based on annual data from the Department of Energy 
[37]; quarterly seasonally adjusted estimates are pre- 
pared by interpolation, using the Census Bureau se- 
ries as an indicator. 

Estimates of net purchases of existing structures are 
based on data from COG IGF. The Census Bureau re- 
ports combined purchases of equipment, land, and ex- 
isting structures and sales of property — that is, land 
and existing structures — ^by function, for both States 
and localities^. (Equipment purchases are purchases 
of durable goods and are discussed below.) Because 
land transactions are excluded from NIPA government 



3. For years after 1978, the Census Bureau separates purchases of equip- 
ment finm those of land and existing structures only for States. BEA esti- 
mates equipment purchases of local governments, using pre- 1978 information 
on the relationships, by function, among equipment, land, and existing struc- 
tures. 



purchases, BEA prepares estimates of the value of pur- 
chases of existing structures, excluding land. Ratios, 
from BEA input-output (I-O) tables, are used to sep- 
arate purchases of structures from those of land, by 
function. Sales of structures and land are separated 
using the overall ratio of purchases of structures to 
those of land. State sales of property are from State 
Finances, and local sales are from a BEA analysis of 
COG IGF miscellaneous general revenues. Sales are 
netted against purchases to derive net purchases of 
existing structures. Quarterly seasonally adjusted es- 
timates are interpolated without indicator from the 
annual estimates, and current estimates are extrap- 
olated judgmentally. 

Annual estimates of general government force- 
account compensation — that is, compensation paid by 
State and local government on own-workforce new 
construction (other than enterprise construction) — are 
prepared using the 1-0 tables, which have estimates 
of this compensation by type of construction, by func- 
tion. Ratios of force-account compensation to the value 
of new construction, by type, are interpolated without 
indicator between 1-0 years and extrapolated. The an- 
nual estimates are the product of these ratios and an- 
nual data on new construction put in place, by type. 
Quarterly seasonally adjusted estimates of highway, 
education, and all other force account construction are 
prepared by interpolation, using seasonally adjusted 
Census Bureau highway, education, and all other con- 
struction as the indicators. Highway construction is 
used as the indicator for the current estimates because 
most force-account new construction compensation re- 
lates to highway planning. 

Financial services. — Government purchases of 
services includes an imputation for the estimated 
value of services rendered to State and local govern- 
ments without payment by depository institutions — 
that is, financial intermediaries except life insurance 
carriers and private noninsured pension plans. 

The derivation of the annual and quarterly esti- 
mates of imputed interest is based on data from the 
Federal Deposit Insurance Corporation and the Fed- 
eral Reserve Board data on property income paid and 
received by commercial banks and on the ownership 
of deposits [6, 7, 13]; it is explained below in the dis- 
cussion of the net interest component of expenditures. 

Durable goods, nondurable goods, and other 
services. — BEA prepares annual estimates of the re- 
maining purchases from COG IGF and State Finances 
data for expenditures on current operation and equip- 
ment and for general government sales, separately 
for States and for localities, for each of the functions 
shown in appendix HI-B. 

Table in-5 traces the derivation of the estimates of 
purchases of other goods and services — that is, goods 
and services other than compensation, structures, and 
financial services — from COG data for: Current oper- 
ating expenditures; expenditures on equipment, land. 



94 Government Transactions. 



J^ovember 1988 



and existing structures; and the government sales cat- 
egories of COG "current charges and miscellaneous 
general revenue." (If a noncensus year were used, the 
data source would be GF, but the procedure would be 
the same.) For brevity, table III-5 does not make ex- 
plicit the functional detail or the separate treatment 
for States and localities; where appropriate, the notes 
cite the use of published functional detail, of unpub- 
lished detail that underlies the published COG. 

The derivation in table III-5 starts with COG data 
for current operating expenditures. The first step is to 
subtract salaries and wages (except for 1978-81, when 
the COG IGF data classified them separately). The 
second step is to subtract other current operating ex- 
penditures that are not NIPA purchases of other goods 
and services: Pay -related outlays that are included 
in NIPA compensation (as other labor income), pay- 
ments that are included in NIPA transfer payments, 
enterprise expenditures for operations, and subsidies 
paid to railroads. The third step is to separate pur- 
chases of equipment from COG data on equipment, 
land, and existing structures, as described in the dis- 
cussion of structures above. The fourth step is to add 
these equipment estimates to other current operating 
expenditures, as modified in the first two steps; the 
sum equals gross purchases. The fifth step is to sub- 
tract government sales from gross purchases because 
they are treated as offsets to purchases in the NIPA's; 
the result equals net purchases. 

The functional detail, which is not explicit in ta- 
ble III-5, is used to distribute gross purchases, sales — 
and, thus, net purchases — among durable goods, non- 
durable goods, and other services. For each general 
government function, steps one and two yield annual 
current-dollar estimates of (1) the remainder of other 
expenditures on current operation and (2) government 
sales. For each general government function and each 
enterprise function, step three yields annual current- 
dollar estimates of equipment purchases. In addition, 
data on libraries from the Association of American 
Publishers [3] and from Bowker's [8] are used to es- 
timate purchases of books and audiovisual materials 
by four functions — elementary and secondary educa- 
tion, higher education, public libraries, and general 
control. For each of these functions, the estimates 
of books and audiovisual equipment are classified as 
gross purchases of diorable goods and are subtracted 
from the remainder of other expenditures on current 
operations. 

The remainder of other expenditures on current op- 
erations is distributed, by function, among gross pur- 
chases of nondurable goods, gross purchases of other 
services, and gross purchases of equipment parts, us- 
ing benchmark information on the commodity compo- 
sition of purchases, also classified by function, from 
BEA's benchmark I-O tables [34].'' Purchases of equip- 
ment parts are classified as gross purchases of durable 



4. The 1-0 benchmark commodity detail and its use in this distribution is 
described in the section on conBtant-dollar estimates. 



goods, as are purchases of equipment and, as previ- 
ously mentioned, books and audiovisual equipment. 
Government sales are also distributed, by function, 
among sales of durable goods, nondvu-able goods, and 
other services, using the 1-0 benchmark commodity 
detail. The estimates of (net) purchases of durable 
goods, nondurable goods, and other services are de- 
rived by subtracting sales from gross purchases. 

Quarterly seasonally adjusted estimates are inter- 
polated from the annual all-function totals of each of 
the major categories without indicator. The current 
quarterly estimates are derived, as explained below, 
by extrapolating the constant-dollar estimates judg- 
mentally and converting them to current dollars with 
appropriate price indexes. 

Transfer payments to persons 

State and local government transfer payments to 
persons consist of benefits from social insurance ftmds; 
public assistance; and payments for education, em- 
ployment and training, and other assistance. Esti- 
mates are prepared monthly, as well as quarterly and 
annually, because they are a component of the per- 
sonal income and outlay account. The derivation of 
these estimates is shown in table III-4. 

Benefits from social insurance funds. — Benefits 
from social insurance funds consist of State and local 
employee retirement benefits, including withdrawals 
from pension systems; temporary disability insurance 
benefits; and workers' compensation benefits. BEA 
prepares monthly seasonally adjusted estimates for 
each of these by interpolating the calendar year to- 
tals without an indicator and extrapolating the cur- 
rent estimates judgmentally; quarterly estimates are 
summed from the monthly estimates. 

Annual data on benefits from State and local gov- 
ernment employee retirement systems are from the 
Census Bureau's Retirement Systems report, adjusted 
to a calendar year basis as described above under con- 
tributions for social insurance. Annual estimates of 
temporary disability insurance benefits are from the 
reports of the State-run systems providing these ben- 
efits [45]. Annual estimates of workers' compensation 
benefits are fi-om State Finances. 

Public assistance. — Public assistance consists of 
medical care, aid to families with dependent children 
(AFDC), supplemental security income (SSI), cash gen- 
eral assistance, low-income energy assistance, emer- 
gency assistance, and medical insurance premiums 
paid on behalf of indigents. 

Medical care — that is, medical vendor payments — is 
government payments on behalf of indigents for med- 
ical services, drugs, and other medical supplies. Most 
of these payments are for the federally assisted Medi- 
caid program; the remaining payments are State and 
local general assistance. Since 1983, calendar year 
estimates of medical vendor payments are based on 
quarterly data from the Health Care Financing Ad- 



Government Transactions. 



J^ovember 1988 95 



Table III-5. — Derivation of State and Local Government Purchases of Goods and Other Services, FY 1982 



Census/NIPA Category 



Table 1 1 1-2 
referent 



col. 



line 



FY 1982 
estimate 
(Billions 

of 
dollars) 



Source 



Notes 



Current operating expenditures, 
/.ess; Salaries and wages 



375.1 
190.3 



Direct from COG/GF 
Various 



Less: Supplements to wages and 
salaries. 

OASDHI 



11 



Health and life insurance (includes 
TIAA). 



Retirement. 



25.9 

8.2 
9.1 

6.4 



Various . 



Workers' compensation, private. 



Workers' compensation, public. 



.6 



Unemployment compensation . 



Judicial system payments. 



Less: Current operating expenditures 
classified as transfers to persons. 



14 



30.2 



COG/GF direct: 
Federal NIPA data; 
HHS. 



Less: Enterprise operating expenditures 
and subsidies paid to railroads. 



17 



35,1 



COG/GF direct. 



Plus: Equipment, land, and existing 
structures. 



13.1 



COG/GF direct 
measure. 



Less: Land , 



2.7 



COG/GF-derived . 



For years after 1981 , tfiese data are derived from: 1) 
Data from the Census publication Public Employment, 
2) direct measures within the context of COG/GF for 
education wages and salaries: these data are 
surveyed for the Department of Education. For 1977- 
81, directly measured from unpublished GF data. For 
years before 1978, only the first of these two 
approaches is available. 

Certain supplements to wages and salaries are included 
in the COG/GF current operating expenditures; they 
are identified here: 

NIPA data on OASDHI contributions paid by State 
and local governments as employers. 

NIPA data on payments by State and local 
governments as employer to private insurers 
(benchmarked to Census of Governments surveys 
of employee benefits). 

Payments by local governments as employers to 
State administered retirement systems, published 
as an exhibit in COG/GF. 

NIPA data from insurance industry sources. These 
payments are by State and local governments as 
employers to private insurers for workers' 
compensation. 

BEA estimate of payments by local governments as 
employers to State-administered workers' 
compensation systems. The estimate is based on 
payments for State employees (published in State 
Finances). An average payment per State 
employee is derived, and multiplied by the number 
of local employees. 

NIPA data on unemployment compensation 
contributions paid by State and local governments 
as employers. 

NIPA data, primarily for payments made to jurors 
Estimated as a function of State judicial system 
current operating expenditures, in State Finances. 

$26.1 billion of this total is medical vendor payments 
directly identified in GF. Another $2.5 billion is 
identified from Federal data on two Federally assisted 
programs: Low-income energy assistance and job- 
training programs. Almost all of the remainder is 
transfers for foster care programs: estimates are 
based on unpublished Census Population Division 
data and occasional studies by nonprofit 
organizations. 

Most of these expenditures are identified directly in 
functional terms; e.g., all current operating 
expenditures for the function air terminals, or parking, 
are classified as enterprise operating expenditures. 
About $1.5 billion (all in local governments) is not 
directly available from COG/GF. Data on local toll 
facilities are taken from DOT Highway Statistics; for 
off-track betting and the DC. lottery by direct contact 
with localities; and for miscellaneous commercial 
activities from unpublished BEA research into Census 
Bureau records for large local governments. 

Until 1977, COG/GF identified equipment separately 
from land and existing structures. For 1978 and later, 
all three items are measured as one value in COG/ 
GF. BEA estimates the equipment component, using 
State Governments Finances and School Finances 
where available, and historical relationships (by 
function) from before 1977. 

After equipment is identified, the residual land and 
existing structures is further divided, using 
relationships derived by function from l-O studies. 
Land is separately identified so that it can be 
excluded from NIPA expenditure measures. (Land 
sales are also excluded from NIPA measures of 
receipts). 



96 Government Transactions. 



Jslovember 1988 



Table III-5.— Derivation of State and Local Government Purchases of Goods and Other Services, FY 1982- 

Continued 



Census/NIPA Category 


Table III-2 
referent 


FY 1982 
estimate 
(Billions 

of 
dollars) 


Source 


Notes 


col. 


line 


Less: Existing structures 


12 
7 

13 
6 

8 

13 


7 
4 

■4 
14 

14 
' 1 


1.5 
0.6 

103.1 
13.0 

.1 
90.0 


COG/GF-derived 


Expenditures on existing structures are removed here 
because in the NIPA's they are a part of the 
structures component of purchases of goods and 
services. 

After purchases other than compensation and structures 
are identified for a given GF year, the data are 
retimed to calendar years. For State data, two 
adjacent COG/GF reports are averaged to produce a 
calendar year. Local governments are retimed by a 
slightly different process, reflecting the fact that local 
governments in any one COG/GFreport have many 
different fiscal years. After calendar years are derived 
for States and localities, quarters are derived by 
interpolating without an indicator. The $0.6 billion is 
the difference between the original COG/GF-derived 
data, and the interpolated results averaged to a July- 
June year. 

This residual comprises purchases excluding 
compensation, structures, and imputed financial 
serv ces. 

Partly direct identification in published source e.g., 
school lunch charges. Remainder identified from 
ubpublished BEA analysis of the published data. See 
table A-1, analysis of current charges and 
miscellaneous general revenue. 

Made as required to conform results of calendar-year 
interpolation to fiscal-year totals. 

Gross all other purchases, less offsetting receipts. 
Adjusted as required for timing. 


Plus: Calendar-year adjustments 


BEA 


Equals: Gross all other purchases 




Less: Census receipts treated in NIPA's 
as offset to purchases. 

Less; Timing and other adjustments 

Equals: Other purchases of goods and 
services, NIPA's. 


COG/GF current 
charges and 
miscellaneous 
general revenue. 

BEA 







1. Less: Financial inputation, column 5, line 4. 



COd'GF Census of Governments and/or Governmental Finances 
HHS U.S. Department of Health and Human Services 

TIAA Teachers' Insurance and Annuity Association 



Government Transactions. 



J^ovember 1988 



97 



ministration (HCFA), HHS [41]; previously, data were 
available monthly from HCFA and predecessor orga- 
nizations. From 1982 forward, the general assistance 
component is estimated on the basis of a study for 
1983 [12] and various information from States that 
have such programs; previously, the HHS monthly 
data for medicaid included general assistance medical 
payments. For 1984 and later years, the monthly and 
quarterly seasonally adjusted estimates are interpo- 
lated from the annual data without an indicator. Be- 
fore 1984, when the series exhibited measurable sea- 
sonality, the monthly data were seasonally adjusted 
using the Census X-11 seasonal adjustment procedure. 

Monthly data for AFDC and for emergency assis- 
tance are from the Office of Family Assistance, HHS 
[40]; the AFDC data are supplemented by informa- 
tion from the Administration for Children, Youth, and 
Families, HHS [38]. The monthly data are season- 
ally adjusted, using the Census X-11 seasonal adjust- 
ment procedure. Annual and quarterly estimates are 
summed from the monthly estimates. 

Monthly data for SSI are from the Social Security 
Administration, HHS [46]. In January 1974, the Fed- 
eral SSI program replaced aid to the blind, old age 
assistance, and aid to the permanently and totally dis- 
abled. State governments that chose to continue their 
own SSI program did so in one of two ways. Some 
States make direct payments to individuals and some 
deposit the payment with the Federal Government, 
which then makes the supplemental payment to the 
individual. The monthly data are seasonally adjusted, 
using the Census X-11 seasonal adjustment procedure. 
Annual and quarterly estimates are summed from the 
monthly estimates. 

Annual data for cash general assistance are extrap- 
olated judgmentally from the 1984 level established 
in an informal BEA survey of the States having such 
programs. Before 1981, data were available from 
HHS. Monthly seasonally adjusted estimates are in- 
terpolated from the annual estimates and extrapolated 
judgmentally. Quarterly estimates are summed from 
the monthly estimates. 

Transfer payments for energy assistance to low- 
income individuals are recorded for 1977 and later 
years. Annual estimates are derived from Federal 
grants-in-aid, modified to exclude administrative costs 
using information from the Social Security Bulletin: 
Annual Statistical Supplement. The remainder is 
transfer payments and includes both cash payments to 
low-income individuals and vendor payments to sup- 
pliers. Information on independent State programs is 
from a study by the Maryland Energy Assistance Pro- 
gram [39]. Monthly seasonally adjusted estimates are 
interpolated from the annual estimates without indi- 
cator and extrapolated judgmentally. Quarterly esti- 
mates are summed from the monthly estimates. 

The remainder of public assistance consists of emer- 
gency assistance and medical insurance premiums 
paid for indigents. Monthly data for emergency as- 



sistance are supplied along with those for AFDC, as 
stated above. Monthly data for medical insurance pre- 
miums paid on behalf of indigents are from the So- 
cial Security Administration, HHS [42]. The monthly 
data are seasonally adjusted, using the Census X-11 
seasonal adjustment procedure. Annual and quarterly 
estimates are summed from the monthly estimates. 

Education. — ^These payments are separately iden- 
tified in State Finances as "assistance and subsidies." 
These payments include scholarships, stipends, fel- 
lowships, and similar payments to individuals and 
State support for nonprofit educational institutions. 
Monthly seasonally adjusted estimates are interpo- 
lated from the annual estimates without an indica- 
tor, and the current estimates are extrapolated judg- 
mentally. Quarterly estimates are summed from the 
monthly estimates. 

Employment and training. — Since 1982, employ- 
ment and training has consisted of payments to non- 
profit institutions for training programs under the Job 
Training Partnership Act of 1982. Annual data are 
from the analysis of Federal grants in aid to State and 
local governments described in part II. Monthly sea- 
sonally adjusted estimates are interpolated from the 
annual estimates without an indicator, and the cur- 
rent estimates are extrapolated judgmentally. Quar- 
terly estimates are summed from the monthly esti- 
mates. 

In earlier years, employment and training included 
payments under the Comprehensive Employment and 
Training Act (CETA) and its predecessor, the Public 
Employment Program (PEP), which from 1971 until 
1982 provided fiinds for employment in State and local 
governments, for employment in nonprofit organiza- 
tions, and for job training programs run by nonprofit 
institutions. Emplojonent in State and local govern- 
ments is included in the compensation component of 
purchases; the remainder is included in transfer pay- 
ments to persons. For employment in nonprofit in- 
stitutions, estimates were based on occasional infor- 
mal estimates of CETA employment in nonprofit insti- 
tutions made by the Department of Labor's Employ- 
ment and Training Administration (ETA) and on staff 
studies done by the Urban Institute [58]. ETA esti- 
mates of average pay per CETA participant were mul- 
tiplied by monthly estimates of nonprofit employment 
to derive dollar amounts for these transfers. For job 
training programs run by nonprofit institutions, dollar 
amounts for training grants were available quarterly 
from ETA [53]. 

Other transfer payments. — ^Transfer payments 
compensating victims of crime are currently being paid 
in 37 States. Since 1986, annual data have been 
available, with a 1-year lag, from the Department of 
Justice, Office for Victims of Crime [48]. Estimates 
for 1979-85 are based on a compilation of data on 
State benefits by the New York Crime Victims Board 
[19]. Between 1968 and 1978, data were collected 



98 Government Transactions. 



^November 1988 



by BEA on an informal basis from individual States. 
Monthly seasonally adjusted estimates are interpo- 
lated from the annual estimates without an indica- 
tor, and the current estimates are extrapolated judg- 
mentally. Quarterly estimates are summed from the 
monthly estimates. 

Since 1981, annual payments to bona fide residents 
of the State of Alaska have been made from the earn- 
ings of a fund that receives payments from companies 
exploiting the North Slope fields. Monthly data on a 
cvurent basis are available from the office of the Alaska 
Department of Revenue. The monthly data are sea- 
sonally adjusted using the Census X-11 seasonal ad- 
justment procedure, and the annual and quarterly es- 
timates are summed from the monthly series. 

Calendar year estimates for the remaining trans- 
fer payments are prepared, primarily from COG IGF 
or State Finances. The estimates are summed, and 
monthly seasonally adjusted estimates are interpo- 
lated from the aggregate without an indicator; current 
estimates are extrapolated judgmentally. The remain- 
ing transfer payments are: (1) Veterans bonuses, from 
State Finances; (2) other veterans benefits, from the 
State of Massachusetts; (3) other public welfare, which 
is extrapolated from the State Finances 1962 level, us- 
ing other public welfare expenditures as an indicator; 
(4) health, which is extrapolated from the State Fi- 
nances 1962 level, using other health expenditures as 
an indicator; (5) foster care payments to foster par- 
ents, which are based on data on Federal Government 
expenditures under Section IV-E of Title XX of the So- 
cial Security Act [44], using relationships based on a 
1984 survey of State payments for foster care [16]; and 
(6) foster care payments to institutions, which are ex- 
trapolated from a 1983 study by the American Public 
Welfare Association [2]. 

Net interest paid 

Net interest paid is total interest paid by State and 
local government less interest received, including that 
received by social insurance funds and the imputed 
interest received by State and local governments. 

Calendar year estimates of interest paid and mone- 
tary interest received by State and local government, 
including that received by social insurance fimds other 
than employee retirement funds, are prepared by ad- 
justing COG IGF or State Finances fiscal year data by 
the general procedure described earlier. For workers' 
compensation and temporary disability systems, all in- 
vestment earnings are taken to be interest. 

Fiscal year data on total investment earnings of em- 
ployee retirement systems, reported in the Census Bu- 
reau's Retirement Systems, are converted to a calendar 
year basis in the same way as contributions to these 
systems. Annual estimates of the dividend earnings 
of these systems (described below) and, from 1985 for- 
ward, of their net realized capital gains are subtracted 



to derive the interest earnings of retirement funds as 
a residual. 

For all of these monetary interest flows, data are 
available only with a 2-year lag. For both the current 
and the first annual revision estimates, the estimates 
for each of these flows are extrapolated judgmentally. 

Quarterly seasonally adjusted estimates for mone- 
tary interest paid and received by State and local gov- 
ernments, their retirement systems, and their other 
social insurance funds are interpolated without indi- 
cator and extrapolated judgmentally; the seasonally 
adjusted and unadjusted estimates are the same. 

The annual estimate of imputed interest paid to 
State and local government is prepared as part of the 
estimates of imputed interest and associated service 
charges for the other sectors. It is limited to the State 
and local government share of total imputed interest 
paid by commercial banks. (Ibtal imputed interest 
paid by commercial banks equals the sum of mone- 
tary interest received on depositor's funds, dividends 
received, income received on direct lease financing, 
and imputed interest received from Federal Reserve 
banks less interest paid on deposits.) Estimates are 
from Federal Deposit Insurance Corporation and Fed- 
eral Reserve Board data on property income paid and 
received by commercial banks [6, 7]. The State and lo- 
cal government share of this total is equal to the share 
of State and local government deposits in commercial 
bank deposit liabilities, from Federal Reserve Board 
data on the ownership of deposits [13]. Quarterly esti- 
mates are derived by interpolation, using flow of funds 
account data on holdings as the indicator [7]; current 
estimates are extrapolated judgmentally. 

Dividends received 

The dividends received by State and local govern- 
ments, primarily by their retirement systems, are 
treated as negative expenditures. With the excep- 
tion of their retirement systems, most governments 
do not routinely invest in equities, because liquidity 
(after safety) is most often the primary concern of gov- 
ernment financial managers. In recent years, some 
State governments have reported small volumes of eq- 
uity earnings in footnotes in State Finances. These 
earnings (from current charges and miscellaneous gen- 
eral revenue) are reported here together with dividend 
earnings of retirement systems. 

Estimates of dividends received by State and lo- 
cal retirement systems have been prepared for 1968 
and subsequent years; before 1968, they are assumed 
to be small and included in interest received. Es- 
timates are derived from Finances of Selected Pub- 
lic Employee-Retirement Systems [28] data for end-of- 
quarter holdings of corporate equity; beginning and 
ending holdings are averaged to represent quarterly 
holdings, which then are multiplied by quarterly av- 
erages of the Standard and Poor's 500 stock dividend- 



Government Transactions- 



J^ovember 1988 



99 



price ratio for common stocks [20]. Current estimates 
are extrapolated judgmentally. 

Subsidies 



State and local subsidies consist of payments to rail- 
roads. Before 1983, annual data, provided by the 
Association of American Railroads [4], were interpo- 
lated quarterly without indicator. From 1983 forward, 
the estimates are extrapolated judgmentally from the 
1982 level. 



Current surplus of government enterprises 

The current surplus of government enterprises is es- 
timated primarily from COG IGF and State Finances 
data for 11 categories of enterprises: Water, sewer- 
age, gas, electricity, toll facilities, liquor stores, air ter- 
minals, water terminals, housing and urban renewal, 
public transit, and a residual category that includes 
State lotteries, off-track betting, local parking, and 
miscellaneous activities. 

To estimate current operating receipts, BEA adds to 
COG IGF utilities and liquor stores revenue an esti- 
mate of other enterprise revenue, which is included in 
COG IGF current charges and miscellaneous general 
revenue, as shown in table III-4. An estimate of non- 
operating receipts included in the COG IGF data for 
electric utilities [36] is removed, as described earlier. 
Quarterly seasonally adjusted estimates of current op- 
erating receipts are interpolated from the annual es- 
timates without indicator and extrapolated judgmen- 
tally. 

Estimates of subsidies paid by the Federal Govern- 
ment to State and local government enterprises are 
also added, because COG IGF does not include them 
in enterprise revenues. Federal subsidy payments 
to these enterprises are derived from analyses of the 
Monthly Treasury Statement [56]. Quarterly season- 
ally adjusted estimates are prepared using the Cen- 
sus X-11 seasonal adjustment procedure. (See part II, 
Federal Government Transactions.) 

To estimate current operating outlays, BEA adds 
to the COG IGF current operating expenditures, by 
function, additional compensation outlays — that is, 
employer contributions to social insurance funds on 
behalf of enterprise employees. To avoid double- 
counting, BEA subtracts data on State liquor store in- 
ventory change from the current operating outlays of 
liquor stores. This inventory change is derived from 
State Finances and is included in purchases of goods 
and services. Quarterly seasonally adjusted estimates 
of current operating outlays are interpolated from the 
annual estimates without indicator and extrapolated 
judgmentally. 



For specific types of enterprises, additional source 
data augment COG IGF. Data on local toll facilities 
are from Highway Statistics [54], Federal Highway 
Administration. Sporadic reports from local govern- 
ments in New York in which betting facilities are lo- 
cated are used to assemble information on off-track 
betting. Currently, information from Gaming and Wa- 
gering Business [9] is used to estimate that part of en- 
terprise surplus generated by lotteries; annual data 
on lottery receipts and expenditures, with a 1-year 
lag, and current quarterly data on gross lottery sales 
supplement the receipts and expenditures data from 
COG IGF. 

For other enterprise revenues, enterprise compen- 
sation, and other current expenditures, quarterly sea- 
sonally adjusted estimates are interpolated without in- 
dicator from the annual estimates and extrapolated 
judgmentally. 

Wage accruals less disbursements 

The estimates of wage accruals less disbursements, 
which convert wages and salaries from an accrual ba- 
sis to a payments basis, are prepared along with the 
other compensation estimates. Differences between 
accruals and disbursements arise primarily because 
of strikes. Estimates are based on contact with the 
jurisdictions affected and are prepared as necessary. 

Surplus or deficit (— ), national income and 
product accounts 

The NIPA surplus or deficit is the excess of total 
receipts over total expenditures. The measure is di- 
vided into two parts: The surplus generated by the 
excess of receipts over outlays of the social insurance 
funds and the surplus or deficit resulting from all other 
government transactions. To accomplish this division, 
the part of purchases that represents administrative 
expenses of the social insurance funds must be identi- 
fied. Data for administrative expenditures are avail- 
able in State Finances for workers' compensation and 
temporary disability systems; Retirement Systems has 
similar data after 1981; prior to 1982, such data were 
available only in the quinquennial censuses of govern- 
ments. In all cases, these data are averaged to calen- 
dar years, and quarterly seasonally adjusted estimates 
are interpolated from the annual estimates without in- 
dicator; current quarterly estimates are extrapolated 
judgmentally. 

The social insurance fund surplus is calculated as 
the sum of contributions, interest, and dividends re- 
ceived by social insurance funds, less the sum of social 
insurance benefits and administrative expenses. 

The other funds surplus or deficit equals the NIPA 
surplus or deficit minus the social insurance fund sur- 
plus. 



100 Government Transactions. 



Jslovember 1988 



Constant-Dollar Purchases of 
Goods and Services 

For the most part, constant-dollar estimates of State 
and local government purchases of goods and services 
are prepared by deflating current-dollar estimates by 
suitable price indexes. The principal exceptions are 
compensation and imputed financial services, both of 
which are estimated by extrapolating base-year values 
by quantity indicators. The price indexes are taken 
primarily from: Current Construction Reports [26], 
BLS Producer Prices and Price Indexes [52], and BLS 
CPI Detailed Report [49]. The specific price indexes 
used are shown in table III-6. The order of table III-6 
is that used for the current-dollar estimates of pur- 
chases of goods and services shown in NIPA table 3.8. 
The advance estimates reflect preliminary BEA esti- 
mates of the construction price indexes, 2 and occa- 
sionally 3 months of PPI's, and 2 months of CFFs. The 
price data are complete by the final estimates. 

Compensation of employees 

The constant-dollar estimates of the compensation 
component are obtained by extrapolating base-year 
compensation by an index of employee hours that is 
adjusted, to the extent possible, for changes in expe- 
rience and education — that is, in the quality of the 
workforce. This procedure is designed to approximate 
specification pricing for output produced by general 
government. It assumes that, for a given type of em- 
ployee, output per hour worked does not change over 
time and that productivity changes occur for the work- 
force only because of changes in the mix of employees 
with respect to their level of experience, their educa- 
tion, and the fiinctions in which they are employed. 
The mix is defined, to the extent possible, by fiinction, 
by level of experience, and by education. For each 
type of employee for which BEA has data, constant- 
dollar compensation in a given year is the product of 
average base-year (1982) compensation and an index 
of employee hours that is the product of employment 
measured in full-time equivalent units and the ratio 
of average weekly hours worked to base-year average 
weekly hours worked. 

Monthly and annual measures of full and part-time 
employment and hours worked are derived for edu- 
cation and for noneducation from BLS tabulations of 
average weekly hours worked and of employment and 
wages reported by employers covered by State unem- 
ployment insurance programs [50, 51]. The annual 
Census Bureau report. Public Employment [30], is 
used to convert full- and part-time measures of em- 
ployment to full-time equivalents. Before 1979, these 
unemployment insurance data did not cover State and 
local government employment. The estimates before 
1979 were based on the annual Public Employment 



report and on monthly data from BLS establishment 
surveys. 

For estimates of constant-dollar education compen- 
sation, eight employee types are identified, six from 
Public Employment and two from a 1973 study from 
the Office of Education, Department of Health, Ed- 
ucation, and Welfare [35]. For primary-secondary 
teachers — the largest category — ^independent data are 
available to adjust for changes in the composition of 
employment. Demographic and salary data collected 
in an annual National Education Association survey 
of teachers [17] are distributed into 20 groups de- 
fined by teacher characteristics — years of experience 
and level of educational attainment. For each of the 
20 groups, reported average base-year salary is mul- 
tiplied by employment; the results are summed and a 
measure of average salary (valued in base-year prices) 
for primary-secondary teachers in the current period 
is derived. The difference between this measure and 
base-year average salary represents the shift; in the 
composition of employment with respect to experience 
and educational attainment. Average base-year com- 
pensation is then multiplied by the product of this 
composition shift and the index of employee hours 
described above— that is, the product of employment 
measured in full-time equivalent units and the ratio 
of average weekly hours worked to base-year average 
weekly hours worked. 

For the remaining seven categories of education em- 
ployment, average base-year compensation for each 
category is multiplied by the index of employee hours 
described above — that is, the product of employment 
measured in full-time equivalent units and the ratio 
of average weekly hours worked to base-year average 
weekly hours worked. The results are summed over 
all eight categories to constant-dollar education com- 
pensation. 

For noneducation compensation, the BLS data are 
disaggregated into two categories: Federally fiinded 
public service employment and other. Public service 
employment was a component of State and local gov- 
ernment employment from 1972 to 1981. Measures 
of public service employment and an estimate of av- 
erage 1982 compensation for these employees are de- 
rived from internal documents of the Employment and 
Training Administration, Department of Labor [53]. 

The remainder of noneducation constant-dollar com- 
pensation is estimated as the product of average base- 
year compensation and the index of employee hours — 
that is, the product of full-time equivalent employ- 
ment and the ratio of average weekly hours worked to 
base-year average weekly hours worked. For the years 
1950-70, a factor designed to reflect rising educational 
and technical attainments in the Federal workforce 
was applied to State and local noneducation employ- 
ment. 



Government Transactions. 



JSIovember 1988 



101 



Table III-6.— Price Indexes Used in the Deflation of State and Local Government Purchases of Goods and 

Services 



Category 



Price index (or quantity extrapolator of base-year value) 



1982 

weight 

(Percent) 



Purchases of goods and services 



Durable goods 

Textile housefurnishings 

Tires, tubes, tread, and repair materials 

Hand and edge tools and lawn and garden equipment. 

Miscellaneous metal products 

Agricultural machinery and equipment 

Construction machinery and equipment 

Metalworking machinery and equipment 

General purpose machinery and equipment 

Special industry machinery and equipment 

Integrating and measuring instruments 

Motors, generators, motor generator sets 

Switchgear, switchboard, etc. equipment 

Electronic components and accessories 

Miscellaneous electrical machinery and equipment 

Calculating and accounting machines . 



Typewriters and office machines n.e.c 

^fachine shop products 

Wood commercial furniture 

Metal commercial furniture 

Household appliances 

Home electronic equipment 

Motor vehicles 

Motorcycles 

Motor vehicle parts 

Aircraft 

Railroad equipment 

Sporting and athletic goods 

Small arms 

Photographic and photocopying equipment., 

Mobile homes 

Musical instalments 



Phonograph records and prerecorded tapes. 

Books and other durable printed material 

Other durable goods 

Computers and peripherals 



Nondurable goods 

Alcoholic beverages... 
Animal food and feed. 

Finished fabrics 

Apparel 

Coal 

Petroleum products.... 



Industrial chemical products 

Prepared paint and allied products 

Drugs and pharmaceuticals 

Agricultural chemicals and chemical products 

Soap and synthetic detergents 

Miscellaneous rubber products 

Miscellaneous plastic products 

Pulp, paper, and products excluding building paper. 

Metal containers 

Miscellaneous metal products 

Electric lamps and bulbs 

Glass and glass products 

Construction sand, gravel, and crushed stone 

Toys, games, and children's vehicles 

Small arms ammunition 

Cigarettes 

Photographic supplies 

Pens, pencils, and other marking devices 

Brooms and brushes 

Maintenance and repair materials 

Printed materials 

Food 

Other nondurable goods 



IPD calculated from detail below. 
IPD calculated from detail below. 



PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


tor 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


PP 


for 


IPD 


for 


PP 


for 


IPD 


for 



r textile housefurnishings 

r tires, tubes, tread, and repair materials 

r hand and edge tools 

r miscellaneous metal products 

r agricultural machinery and equipment 

r construction machinery and equipment 

r metalworking machinery and eauipment 

r general purpose machinery and equipment 

r special industry machinery and equipment 

r integrating and measuring instruments 

r motors, generators, motor generator sets 

r switchgear, switchboard, etc. equipment 

r electronic components and accessories 

r miscellaneous electrical machinery and equipment 

r calculating and accounting machines 

r typewriters 

r machine shop products 

r wood commercial furniture 

r metal commercial furniture 

r household appliances 

r home electronic equipment 

r motor vehicles 

r motorcycles 

r motor vehicle parts 

r fixed wing, utility aircraft 

r railroad equipment 

r sporting and athletic goods 

r small arms 

r photographic equipment 

r mobile homes 

r musical instruments 

r phonograph records and prerecorded tapes 

r Federal Government purchases of nondefense printing. 

r finished goods less food and energy 

r computer equipment. (BEA computer price index.) 



IPD calculated from detail below. 



PPI for alcoholic beverages 

PPI for prepared animal feeds 

PPI for finished fabrics 

PPI for apparel 

PPI for coal 

Composite index of PPI's for middle distillates, gasoline, and residual 
fuels. 

PPI for industrial chemicals 

PPI for prepared paint 

PPI for drugs and pharmaceuticals 

PPI for agncultural chemicals and chemical products 

PPI for soap and synthetic detergents 

PPI for miscellaneous rubber products 

PPI for plastic products 

PPI for pulp, paper, and products excluding building paper 

PPI for metal containers 

PPI for miscellaneous metal products 

PPI for electric lamps and bulbs 

PPI for flat glass 

PPI for construction sand, gravel, and cmshed stone 

PPI for toys, games, and cnildren's vehicles 

PPI for small arms ammunition 

PPI for cigarettes 

PPI for photographic equipment 

PPI for pens and pencils 

PPI for brushes 

CPI for maintenance and repair commodities 

IPD for Federal Government purchases of nondefense printing 

PPI for finished consumer foods 

PPI for finished goods less food and energy 



100.000 

3.979 

.056 
.067 
.059 
.090 
.046 
.224 
,039 
.102 
.138 
.067 
.076 
.016 
.034 
.091 
.019 
.111 
.010 
.077 
.300 
.058 
.084 
.953 
.013 
.124 
.004 
.146 
.073 
.003 
.067 
.001 
.034 
.013 
.497 
.262 
.012 

9.064 

-.003 
.023 
.026 
.152 
.049 

2.780 

.437 
.053 
.650 
.206 
.099 
.141 
.087 
.562 
.009 
.060 
.059 
.132 

-.015 
.039 
.015 

-.006 
.229 
.026 
.012 

1.479 
.847 
.472 
.442 



102 Government Transactions. 



J^ovemher 1988 



Table 1 11-6.— Price Indexes Used In the Deflation of State and Local Government Purchases of Goods and 

Services— Continued 



Category 



Price index (or quantity extrapolator of base-year value) 



1982 

weight 

(Percent) 



Services 

Compensation of employees 

Education compensation 

Other compensation 

Other services 

Electiic service 

Air transportation 

insurance 

Automobile leasing, repair, and parl<ing 

Educational services 

Entertainment services 

Transportation and warehousing 

Lodging while out of town 

Miscellaneous repair and other services 

Medical care 

Gas production and service 

Postal services 

Professional services 

Rental services 

Communication services 

Local ti-ansportation 

Water, sewerage, and sanitation services 

Services furnished without payment by financial 

intermediaries except life insurance carriers and private 

noninsured pension (>lans. 

Structures 

New construction put-in-place 

Residential buildings 

Education buildings 

Hospitals and health facilities 

Other buildings 

Highways and sti-eets 

Conservation and development of resources 

Sanitation and sewerage 

Water supply facilities 

Miscellaneous nonbuilding construction 

Electiic supply facilities 

Transit facilities 

Net purchases of existing nonresidential structures 

Net purchases of existing residential farm structijres 

Net purchases of existing residential nonfarm sti-uctures 

Government force-account construction compensation 



IPD calculated from detail below 

IPD calculated from detail below 

Base year value extrapolated by full-time equivalent employment, 
average work week, and (for primary and secondary teaching) 
change in years of experience and level of educational attainment. 

Base year value extrapolated by full-time equivalent employment and 
average work week. 

IPD calculated from detail below 

PPI for commercial power, 40 kw demand 

CPI for airline fares 

CPI for automobile insurance 

CPI for other automobile related fees 

CPI for college tuition 

CPI for entertainment services 

IPD for Federal Government purchases of nondefense transportation 

service. 

CPI for lodging while out of town 

CPI for maintenance and repair services 

CPI for medical care services 

CPI for utility piped gas 

IPD for Federal Government purchases of nondefense parcel post 

service. 

CPI for professional services 

CPI for residential rent 

CPI for telephone services 

CPI for inti-acity mass ti-ansit 

CPI for water and sewerage maintenance 

Base-year value extrapolated by paid employee hours of commercial 

banks. 

IPD calculated from detail below 

IPD calculated from detail below 

Bureau of the Census price index of new one-family houses sold, 

excluding value of lot. 
Average ofTurner Construction Company building cost index and 

Bureau of the Census price index of new one-family houses sold, 

excluding value of lot. 

Turner Construction Company building cost index 

Average of Turner Construction Company building cost index and 

Bureau of the Census price index of new one-family houses sold, 

excluding value of lot. 
Federal Highway Administration composite highway construction index 

Bureau of Reclamation composite construction cost trends index 

Environmental Protection Agency sewage treatment and sewer 

constixiction cost index. 
Average of Federal Energy Regulatory Commission pipeline index and 

Environmental Protection Agency sewage ti-eatment and sewer 

consti-uction. 
Average of the Bureau of Reclamation composite construction cost 

trends index and Federal Highway Administi-ation composite 

highway consti-uction index. 
Bureau of the Census Handy-Whitinan index for electiic light and 

power plants. 
Federal Highway Administi-ation highway structures construction index. 

IPD for purchases of new private nonresidential sti-uctures 

IPD for purchases of new private residential farm stiuctures 

IPD for purchases of new private residential nonfarm stiuctijres 

CPI for maintenance and repair services 



Mote. — This table reflects weights used for 1982. It should lie understood that the system is not IPD 

totally stale; changes are made eis one index is replaced by another, or for other reasons. The PPI 

most importajnt change since 1982 was for force-account compensation; for 1984 and later years, CPI 

the implicit price deflator for noneducaiion compensation is used, rather than the maintenanoe 
and repair services index. 



Implicit price deflator. 
Producer price index. 
Consumer price index. 



Government Transactions. 



JNovemher 1988 103 



Structures 

Constant-dollar estimates of State and local govern- 
ment purchases of structures are derived by deflating 
11 types of new construction, net purchases of existing 
structures, and new construction force-account com- 
pensation. 

New construction. — ^The 11 types of new construc- 
tion put in place are deflated by dividing the quar- 
terly seasonally adjusted, current-dollar estimates by 
the price indexes shown in table III-6. These indexes 
are from Current Construction Reports [26]. These in- 
dexes are smoothed by a three-quarter moving aver- 
age or are seasonally adjusted using the Census X-11 
seasonal adjustment procedure. There are two excep- 
tions: The Census Bureau index for one-family houses 
sold and the DOT highway composite index [55] are 
smoothed by a three-quarter moving average (and the 
latter is then seasonally adjusted). (Prior to 1985 the 
Bureau of the Census index was used with seasonal 
adjustment.) 

Net purchases of existing structures. — ^Net pur- 
chases of existing residential and nonresidential struc- 
tures are deflated by BEA implicit price deflators for 
new private nonfarm residential structures, for new 
private farm residential structures, and for new pri- 
vate nonresidential structures. These estimates are 
prepared along with other components of gross private 
domestic fixed investment. 

New construction force-account compensa- 
tion. — The value of new construction force-account 
compensation is deflated by the implicit deflator for 
noneducation compensation from 1984 forward. Be- 
fore 1984, the deflator was the CPI for maintenance 
and repair services. 

Financial services 

Constant-dollar estimates of the services rendered 
without payment to State and local governments by 
depository institutions — that is, financial intermedi- 
aries except life insurance carriers and private non- 
insured pension plans — are obtained by extrapolating 
the base-year value by BEA estimates of the paid em- 
ployee hours in commercial banks, based on BLS tab- 
ulations of average weekly hours worked and of em- 
ployment and wages reported by employers covered 
by State unemployment insurance programs [50, 51]. 

Durable goods, nondurable goods, and 
other services 

Deflation of purchases of durable goods, nondurable 
goods, and other services is performed for approxi- 
mately 80 types of purchases using detailed price in- 
dexes, largely components of the PPI. The commod- 
ity detail is estimated from COG IGF data on ex- 
penditures for current operations and for equipment 



and on general government sales, by function, as de- 
scribed in the derivation of current-dollar purchases, 
using commodity detail from BEA's benchmark I-O ta- 
bles. Table III-6 shows the commodity composition 
of durable goods, nondurable goods, and services, the 
1982 weights, and the associated price indexes; nega- 
tive entries in table III-6 indicate government sales. 

In the absence of direct measures of the commod- 
ity composition of State and local government pur- 
chases of durable goods, nondurable goods, and ser- 
vices, an indirect procedure is used to estimate the 
commodity detail from the available annual data on 
the major categories of purchases — that is, gross pur- 
chases of equipment, books and audiovisual materi- 
als, equipment parts, nondurable goods, and services; 
and sales of durable goods, nondurable goods, and ser- 
vices. For each function, the quarterly current-dollar 
estimates for the major categories of purchases are dis- 
tributed among commodities using the quarterly com- 
modity price indexes shown in table III-6 and quar- 
terly constant-dollar commodity weights, derived from 
BEA's benchmark 1-0 tables for 1967, 1972, and 1977 
[34 and references therein].^ Then, for each com- 
modity, the current-dollar estimates are deflated by 
the commodity price index shown in table III-6 and 
summed over all functions. 

The first step is to prepare the quarterly constant- 
dollar commodity weights. The 1-0 benchmark com- 
modity detail, classified by function, is converted to 
constant base-year (1982) prices, using the price in- 
dexes shown in table III-6. For each function, the 
constant-dollar commodity weights are interpolated 
annually between 1-0 benchmarks and held constant 
after 1977. For the quarters within each year, the 
constant-dollar commodity weights are held constant 
at the annual level. 

The second step is to prepare the quarterly current- 
dollar estimates for each major category and fiinction. 
The annual current-dollar estimates for each major 
category are interpolated quarterly v/ithout indicator 
at the aggregate — that is, all-function — level; the ag- 
gregate quarterly pattern then is used to interpolate 
the estimates of purchases by each function within the 
major category. 

The third step is to estimate the quarterly current- 
dollar commodity detail for each function. Each quar- 
terly constant-dollar commodity weight (from the first 
step) is multiplied by the price of that commodity and 
the product adjusted proportionately so that the sum 
of these products over all commodities within the func- 
tion and major category is equal to the given current- 
dollar values (from the second step). 

The fourth step is to derive constant-dollar pur- 
chases of durable goods, nondurable goods, and other 



1. The 1-0 commodity detail is based on an examination of information 
from a very small sample of governments, on some direct estimates of expen- 
ditures, and on inferences drawn from the expenditure patterns of private- 
sector organizations engaged in similar activities. (Before 1959, estimates of 
detailed purchases were prepared at the aggregate level only, without regard 
to functional categories, using commodity weights from the 1958 1-0 table.) 



104 Government Transactions. 



JSfovember 1988 



services. Each current-dollar commodity estimate 
(from the third step) is deflated using the appropri- 
ate index shown in table III-6. Total constant-dollar 
purchases of each commodity are derived by sum- 
ming the commodity detail, by function, over all func- 
tions. Constant-dollar purchases of durable goods, 
nondurable goods, and other services are obtained by 
summing the relevant commodity totals. 

The preceding discussion applies to estimates for an- 
nual revisions and comprehensive revisions. For cur- 
rent estimates, a truncated procedure is used that re- 



quires no functional detail. The aggregate constant- 
dollar estimates of durable goods, nondurable goods, 
and other services are extrapolated judgmentally from 
the final quarter of the most recent full year of an an- 
nual revision. The aggregate current-dollar estimates 
of durable goods, nondurable goods, and other services 
are obtained by multiplying the constant-dollar esti- 
mates by price indexes constructed from the price in- 
dexes shown in table III-6, using weights based on the 
constant-dollar commodity distribution from the final 
quarter of the most recent fiill year. 



Sources 



This is a list of publicly available information used in preparing the estimates of State and local government 
transactions. Wherever possible, a specific portion of a larger publication is cited — a chapter, a series, or table 
number/title. In some cases, the information used is more detailed than that available in the listed source, 
which is the publication most accessible to the public. 



1. American Council of Life Insurance. "Annual 
Statement of the Condition and Affairs of the U.S. 
Legal Reserve Life Insurance Companies." Wash- 
ington, DC: ACLI, annually. 

2. American Public Welfare Association. A Statisti- 
cal Summary of the VCIS Social Services Block 
Grant (SSBG) Data for FY 83. Washington, DC: 
APWA, October 1985. 

3. Association of American Publishers. Annual Re- 
port. New York, NY: Association of American Pub- 
lishers, annually. 

4. Association of American Railroads. Economics 
and Finance Department. Analysis of Class 
I Railroads. Washington, DC: AAR, annually. 
(Data on railroad subsidies no longer identifiable 
after 1982.) 

5. Blue Cross and Blue Shield Associations. The 
Blue Cross and Blue Shield Plan Fact Book. 
Chicago, IL: Blue Cross and Blue Shield Associ- 
ations, annually. 

6. Board of Governors of the Federal Reserve Sys- 
tem. Annual Report. Washington, DC: Board of 
Governors, annually. 

7. Board of Governors of the Federal Reserve Sys- 
tem. Sector Tables. Flow of Funds Accounts. (Sta- 
tistical Release Z.l.) Washington, DC: Board of 
Governors, quarterly. 

8. Bowker, R. R. The Bowker Annual of Library and 
Book Trade Information. New York, NY: Bowker, 
annually. 

9. BMT Publications, Inc. Gaming and Wagering 
Business. New York, NY: BMT Publications, Inc., 
monthly. 

10. The City of New York. Comprehensive Annual Fi- 
nancial Report of the Comptroller. New York, NY: 
City of New York, annually. 

11. Commerce Clearing House, Inc. State Tax Guide. 
Chicago, IL: Commerce Clearing House, biweekly. 

12. Desonia, Randolph, and King, Kathleen M. State 
Programs of Assistance for the Medically Indigent. 
Washington, DC: Intergovernmental Health Pol- 
icy Project, The George Washington University, 
November 1985. 

13. Federal Deposit Insurance Corporation. Annual 
Report. Washington, DC: FDIC, annually. 



14. Federal Prison Industries, Inc. Annual Report. 
Marion, IL: Federal Penitentiary, annually. 

15. Health Insurance Association of America. Group 
Health Insurance Coverages in the United States. 
New York, NY: HIAA, annually. 

16. National Conference of State Legislatures. "State 
Foster Care Payments to Individuals, 1984." Den- 
ver, CO, 1986, unpublished. 

17. National Education Association. Survey of NBA 
K-12 Tzacher Members. Appendix B. Washington, 
DC: National Education Association, annually. 

18. National Industrial Conference Board. "Esti- 
mates of Local Revenues Before 1942." New York, 
NY, c. 1945, unpublished. 

19. New York Crime Victims Board. "State Benefits 
for Compensation for Victims of Crime, 1979-84." 
Albany, NY, 1985, unpublished. 

20. Standard & Poor's Corporation. "Yield on the 
Composite 500 Stock Index." Statistical Service: 
Current Statistics. New York, NY: Standard & 
Poor's Corporation, monthly. 

21. Tax Foundation, Inc. "Local Corporate Profits Tax 
Revenues." Washington, DC, c. 1965, unpub- 
lished. 

22. Tax Policy League. Tax Yields. New York, NY: 
Tax Policy League, various years before 1942. 

23. Teachers Insurance and Annuity Association of 
America/College Retirement Equities Fund. "Em- 
ployer Contributions to TIAA/CREF." New York, 
NY, annually, unpublished. 

24. U.S. Department of Commerce. Bureau of the 
Census. Census of Governments. Washington, 
DC: U.S. Government Printing Office, quinquen- 
nially. 

25. U.S. Department of Commerce. Bureau of the 
Census. Current Business Reports, Monthly Retail 
Trade. (Series BR). Washington, DC: U.S. Govern- 
ment Printing Office, monthly. 

26. U.S. Department of Commerce. Bureau of the 
Census. Current Construction Reports: Value of 
New Construction Put in Place. (C 30). Wash- 
ington, DC: U.S. Government Printing Office, 
monthly. 

27. U.S. Department of Commerce. Bureau of the 
Census. Finances of Employee-Retirement Sys- 
tems of State and Local Governments. (GF No. 



105 



106 Government Transactions. 



J^ovember 1988 



2). Washington, DC: U.S. Government Printing 
Office, annually. 

28. U.S. Department of Commerce. Bureau of the 
Census. Finances of Selected Public Employee- 
Retirement Systems. (GR Nos. 1-4). Washington, 
DC: U.S. Government Printing Office, quarterly. 

29. U.S. Department of Commerce. Bureau of the 
Census. Governmental Finances. (GF No. 5). 
Washington, DC: U.S. Government Printing Of- 
fice, annually. 

30. U.S. Department of Commerce. Bureau of the 
Census. Public Employment. (GE No. 1). Wash- 
ington, DC: U.S. Government Printing Office, an- 
nually. 

31. U.S. Department of Commerce. Bureau of the 
Census. Quarterly Summary of Federal, State, 
and Local Tax Revenue. (GT Nos. 1^). Washing- 
ton, DC: U.S. Government Printing Office, quar- 
terly. 

32. U.S. Department of Commerce. Bureau of the 
Census. State Government Finances. (GF No. 3). 
Washington, DC: U.S. Government Printing Of- 
fice, annually. 

33. U.S. Department of Commerce. Bureau of Eco- 
nomic Analysis. Corporate Profits: Profits Be- 
fore Tax, Profits Tax Liability, and Dividends. 
(Methodology Paper Series MP-2). Washington, 
DC: U.S. Government Printing Office, May 1985. 

34. U.S. Department of Commerce. Bureau of Eco- 
nomic Analysis. "The Input-Output Structure of 
the U.S. Economy, 1977." Survey of Current 
Business 64 (May 1984): 42-84. 

35. U.S. Department of Education. "Education Em- 
ployment and Hours." Washington, DC, 1973, un- 
published. 

36. U.S. Department of Energy. Energy Information 
Administration. Financial Statistics of Selected 
Electric Utilities. Washington, DC: U.S. Govern- 
ment Printing Office, annually. 

37. U.S. Department of Energy. Energy Information 
Administration. Nuclear Power Plant Construc- 
tion Activity. Washington, DC: U.S. Government 
Printing Office, annually. 

38. U.S. Department of Health and Human Services. 
Administration for Children, Youth, and Families. 
"Aid to Families with Dependent Children (AFDC) 
Pajonents." Washington, DC, annually, unpub- 
lished. 

39. U.S. Department of Health and Human Services. 
Office of Energy Assistance. Low Income Home 
Energy Assistance: Report to Congress for Fiscal 
Year 1986. Washington, DC: U.S. Government 
Printing Office, 1986. 

40. U.S. Department of Health and Human Services. 
Office of Family Assistance. AFDC Flash Re- 
port. Washington, DC: Office of Family Assis- 
tance, monthly. 



41. U.S. Department of Health and Human Services. 
Health Care Financing Administration. "Medi- 
cal Vendor Payments." Baltimore, MD, quarterly 
(monthly before 1983), unpublished. 

42. U.S. Department of Health and Human Services. 
Social Security Administration. "Medical Pre- 
mium Payments on Behalf of Indigents." Wash- 
ington, DC, monthly, unpublished. 

43. U.S. Department of Health and Human Services. 
Health Care Financing Administration. "Private 
Health Insurance Plans: Coverage, Enrollment, 
and Financial Experience." Health Care Financ- 
ing Review. Washington, DC: U.S. Government 
Printing Office, annually. 

44. U.S. Department of Health and Human Ser- 
vices. Social Security Administration. "Feder- 
ally Funded Foster Care Payments to Individu- 
als." Washington, DC, annually, unpublished. 

45. U.S. Department of Health and Human Services. 
Social Security Administration. Social Security 
Bulletin. Washington, DC: U.S. Government 
Printing Office, monthly with annual statistical 
supplement. 

46. U.S. Department of Health and Human Services. 
Social Secimty Administration. "Supplemental 
Security Income Payments." Washington, DC, 
monthly, unpublished. 

47. U.S. Department of Justice. Bureau of Justice 
Statistics. Prisoners in State and Federal Insti- 
tutions on December 31. Washington, DC: Bureau 
of Justice Statistics, annually. 

48. U.S. Department of Justice. Office for Victims of 
Crime. Victims of Crime Act of 1984: Report to 
Congress by the Attorney General, December 31, 
1987. Washington, DC: U.S. Government Printing 
Office, 1988. 

49. U.S. Department of Labor. Bureau of Labor 
Statistics. CPI Detailed Report. Washington, DC: 
U.S. Government Printing Office, monthly. 

50. U.S. Department of Labor. Bureau of Labor 
Statistics. Employment and Earnings. Wash- 
ington, DC: U.S. Government Printing Office, 
monthly. 

51. U.S. Department of Labor. Bureau of Labor 
Statistics. Employment and Wages: Annual Aver- 
ages. Washington, DC: U.S. Government Printing 
Office, annually. 

52. U.S. Department of Labor. Bureau of Labor 
Statistics. Producer Prices and Price Indexes. 
Washington, DC: U.S. Government Printing Of- 
fice, monthly. 

53. U.S. Department of Labor. Employment and 
Training Administration. "Comprehensive Em- 
ployment and Training Act (CETA) Payments." 
Washington, DC, quarterly until 1982, unpub- 
lished. 

54. U.S. Department of Transportation. Federal 
Highway Administration. Highway Statistics. 



Government Transactions. 



J\lovember 1988 107 



Washington, DC: U.S. Government Printing Of- 
fice, annually. 

55. U.S. Department of Transportation. Federal 57. 
Highway Administration. Price Trends for 
Federal-Aid Highway Construction. Washington, 

DC: FHWA, quarterly. 

56. U.S. Department of Treasury. Financial Manage- 58. 
ment Service. Monthly Treasury Statement of Re- 
ceipts and Outlays of the United States Govern- 



ment. Washington, DC: U.S. Government Print- 
ing Office, monthly. 

U.S. Executive Office of the President. Office 
of Management and Budget. The Budget of the 
United States Government. Washington, DC: U.S. 
Government Printing Office, annually. 
Urban Institute. "Staff Studies on Comprehensive 
Employment and Training Act (CETA)." Washing- 
ton, DC, c. 1976-78, unpublished. 



i 



Appendix III-A 

Analysis of Charges and Miscellaneous General Revenue, COG, 1982 



The first seven columns of table III-A-1 show the derivation of table III-l, column 1, lines 
9 through 15. The entries in the first hne of table III-A-1 are the table III-l entries. 

The entry in the first hne of table III-A-1, column 8, is the coverage adjustment shown in 
table III-l, column 5, line 15. 

The entry in the first line of table III-A-1, column 9, is the other taxes and nontaxes entry 
shown in table III-l, column 12, line 15, minus the timing adjustment shown in table III-l, 
column 8, line 15. 

The entry in the first line of table III-A-1, column 10, is the indirect business tax and 
nontax accruals entry shown in table III-l, column 14, line 15. 



Table III-A-1. 



-Distribution of Current Charges and Miscellaneous General Revenue Among Categories of Receipts and Expenditures, FY 

1982 

[Billions of dollars] 





COG 
Total 

(1) 


Govern- 
nnent 
sales 

(2) 


Sale of 
property 

(3) 


Enter- 
prise 
revenue 

(4) 


Interest 
earnings 

(5) 


Dividends 
received 

(6) 


Other 




Total 
(7) 


Coverage 

adjust- 
ment 

(8) 


Personal 
nontaxes 

(9) 


Indirect 
business 
nontaxes 

(10) 


Charges and miscellaneous general revenue, COG 


104.0 

2.3 

5.0 

8.6 

1.3 

17.4 

5.0 

1.4 

1.5 

.8 

1.5 

2.0 

1.0 

2.3 

.4 

.6 

5.2 

1.6 
7.1 
2.6 
5.2 
.7 
25.8 

2.1 
2.7 


13.0 

2.3 

5.0 


0.7 


15.0 


25.8 


0.1 


49.4 


1.3 


36.4 


11.7 


Current charges: 

Education; 




Institutions of fiigfier education: 
Auxiliary enterprises ' 


















Other ' 










8.6 
.3 

17.4 




8.6 

.3 

17.4 






1.0 




























Sewerage 






5.0 










Sanitation other than sewerage (local only) * 


1.0 








.4 
1.5 




.4 
1.5 




Parks and recreation 
















.8 


















i.5 
1.9 
1.0 
2.3 
.4 
.6 














Highways ' 


.1 
















Water transportation and terminals 


































Parking facilities (local only) 


















Miscellaneous commercial activities ' 


















Other' 


1.4 








3.8 

1.6 
7.1 
2.6 
5.2 


.3 


1.6 


1.9 


Miscellar)eous general revenue: 










1.6 














.2 




6.9 


Donations ' 












2.3 

4.1 


3 


Fines and forfeits ' 














1.1 






.7 


















25.8 












Other: 
Lotteries (Stale only) and off-track betting (local only) 






2.1 

.1 












All other' 


1.5 






.1 


1.0 


.9 


.2 













1. Published in Governmental Finances lor State; estimated by BEA for local (from underlying 
unpublished detail). 

2. Available in summary detail underlying Governmental Finances. 

3. The distribution of the published total to NIPA categories is based on input-output analysis. 

4. Data on current charges for local highways are available in underlying unpublished detail. 
The distribution tjetween toll facilities revenues (enterprise revenues) and other charges (govern- 
ment sales) is based on data from Highway Slalistics, Federal Highway Administration. 

5. Distribution of "other" from BEA analysis of data from Census records for individucd large 
governments. 



6. Data on oil bonuses are from direct contact with States. Such payments are included in Gov- 
ernmental Finances rents and royalties, but are excluded, as a coverage adjustnnent, from NIPA 
transactions. 

7, This represents sales of land and existing structures. The total is distributed between land 
and structures, as are the purchases of land and existing structures. The sale of existing struc- 
tures is a negative addition to gross purchases of structures. 

Note. — Except where noted, these data can be found in Census of Governments, 1982. 
COG Census ot Governments. 



109 



Appendix III-B 

State and Local Government Functions 



General control 

Financial administration 

Police 

Fire 

Correction 

Elementary and secondary education 

Higher education 

Other education (including libraries) 

Health 

Hospitals 

Government employee retirement and disability 

Workers' compensation 

Temporary disability insurance 

Public assistance 

Veterans programs 

Housing and urban renewal^ 

Water supply^ 

Sewerage^ 

Sanitation 

Parks and recreation . 

Natural gas^ 

Agriculture 

Natural resources 

Electricity supply^ 

Regular highways 

Toll highways^ 

Water terminals^ 

Air terminals^ 

Transit^ 

Protective inspection and regulation 

Employment and training 

Liquor stores^ 

Miscellaneous commercial activities (includes lotteries, off-track betting, 

parking, and other miscellany)^ 
Other and unallocable 



1. These are enterprise functions. In the national income and product accounts, purchases of goods and services by enterprises 
consist of capital purchases only. Current operating purchases are included as an expense in the derivation of subsidies less current 
surplus of government enterprises. 

Ill 



-^z 



Methodology Papers: 
The National Income and Product Accounts 

Bureau of Economic Analysis 
U.S. Department of Commerce 



1. Introduction to National Economic Accounting. (1985) Methodology Paper Se- 
ries MP-1, 19 pages, $1.00 (GPO Stock No. 003-010-00158-5). 

2. Corporate Profits: Profits Before Tax, Profits Tax Liability, and Dividends. (1985) 
Methodology Paper Series MP-2, 61 pages, $2.50 (GPO Stock No. 003-010- 
00143-7). 

3. Foreign Transactions. (1987) Methodology Paper Series MP-3, 52 pages, $2.75 
(GPO Stock No. 003-010-00178-0). 

4. GNP:An Overview of Source Data and Estimating Methods. (1987) Methodology 
Paper Series MP-4, 36 pages, $2.00 (GPO Stock No. 003-010-00179-8). 

5. Government Transactions. (1988) Methodology Paper Series MP-5, 120 pages, 
(GPO Stock No. 003-010-00187-9). 

Forthcoming: 

Personal Consumption Expenditures. 
Gross Private Domestic Fixed Investment. 



TO ORDER: The GPO publications listed above must be ordered from Superintendent 
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